direct - vernice kuglin

Transcription

2
IN THE UNITED STATES DISTRICT COURT
APPEARANCES
FOR THE WESTERN DISTRICT OF TENNESSEE
WESTERN DIVISION
------------------------------------------------------UNITED STATES OF AMERICA, )
)
Plaintiff,
)
)
VS.
)
)
)
VERNICE KUGLIN,
)
)
Defendant.
)
NO. 03-20111-Ml
------------------------------------------------------TRIAL PROCEEDINGS
VOIR DIRE OF THE JURY
BEFORE THE HONORABLE JON PHIPPS MCCALLA, JUDGE
AUGUST 4, 2003
VOLUME I
BRENDA PARKER
OFFICIAL REPORTER
SUITE 942 FEDERAL BUILDING
167 NORTH MAIN STREET
MEMPHIS, TENNESSEE 38103
Appearing on behalf of the Plaintiff:
TERRELL L. HARRIS, ESQ.
UNITED STATES ATTORNEY
By: JOSEPH MURPHY, ESQ.
Appearing on behalf of the Defendant:
LOWELL H. BECRAFT, JR.
209 LINCOLN STREET
HUNTSVILLE, ALABAMA 35801
ROBERT G. BERNHOFT, ESQ.
207 EAST BUFFALO STREET
MILWAUKEE, WISCONSIN 53202
3
4
MONDAY MORNING & AFTERNOON
2
3
AUGUST 4, 2003
The voir dire in this case began on this date,
2
MR. BERNHOFT: Yes, Bernhoft, B-E-R-N-H-O-F-T,
3 first name is Robert, and I filed a courtesy copy with
4 Monday, August 4, 2003, at 10:35 o'clock a.m., when and
4 chambers of that pro hac vice motion that has got my bar
5 where evidence was introduced and proceedings were had as
5 numbers, et cetera in there.
6 follows:
6
7
7 bring the --
8
____________
9
10
THE COURT: All right. That's fine. We can
THE COURT: Are we about to ready to bring our
8
THE CLERK: They're on their way.
9
MR. MURPHY: Judge, just one thing, I -- I
10 would like to discuss how we're going to handle voir dire
11 panel around so we can proceed with jury selection?
11 today. I would like to suggest that it might be a good
12
12 idea for the court to do it. This is -- this is a case
MR. BECRAFT: Your Honor, can I take up one
13 real quick matter?
13 where they're alleging a good faith defense, I take it.
14
THE COURT: Sure.
14
THE COURT: They are.
15
MR. BECRAFT: Friend of mine is a lawyer from
15
MR. MURPHY: Based on what has been provided to
16 Milwaukee, Wisconsin, his name is Bob Bernhoft. He called
16 me.
17 me and he wanted to help me with this case, and I have
17
THE COURT: Right.
18 invited him to come down and he's going to sit here, and I
18
MR. MURPHY: And we need to just be real
19 wanted to introduce him to the court. He filed a motion
19 careful that the jury doesn't get confused on what the law
20 for pro hac vice admission, but what he's going to do is
20 is in these tax issues. It's a sensitive subject.
21 just assist me during the course of the trial if the court
21
22 doesn't mind.
22 lawyers do a good portion of the voir dire. It certainly
23
THE COURT: Sure, that's fine.
23 seems to make most lawyers happy.
24
MR. BERNHOFT: Thank you, Judge.
24
25
THE COURT: Let me get your last name again.
25 questions, Your Honor.
THE COURT: Well, I have been letting the
MR. BECRAFT: I wouldn't mind asking some
6
5
MR. MURPHY: I would rather you ask most of
how we're going to handle that, because if you read the
2 cases that deal with the question of how the defendant
2 them.
3
MR. BECRAFT: Oh, okay.
3 proves their good faith defense, there's some things
4
THE COURT: And I would -- Mr. Murphy -- I feel
4 that -- in that that bear -- what we take the position are
5 like, Mr. Murphy -- of course, you always go first in
5 incorrect statements of the law, and generally people are
6 this -- that you can maybe deal with that issue also --
6 allowed to read those into the record -- portions of those
7
MR. MURPHY: Yes, sir.
7 into the record, but the -- that document is not admitted.
8
THE COURT: -- to some degree. I'll ask enough
8 There's some things that I have no doubt they're
9 questions so that you'll have plenty of time to organize
9 admissible and I'm not going to oppose their introduction,
10 your voir dire.
10 and there's other things that I may or may not oppose, but
11
11 it would be a good idea, I think, if we talked about it
MR. MURPHY: Yes, sir. Judge, I've got voir
12 dire organized, it's just -- you know, taxes are things
12 beforehand.
13 people have strong feelings about.
13
14
THE COURT: They don't like them.
14 the court what I plan on doing, just so the court will
15
MR. MURPHY: They don't like them.
15 know in advance. Your Honor, in a tax evasion case or
16
THE COURT: Right, but I think y'all have to
16 willful failure to file case, intent to commit a crime is
MR. BECRAFT: If the floor is open, I'll tell
17 deal with that and talk about people not being swayed by
17 real important. The government must prove that, and the
18 that sort of point of view.
18 defense is, you know, basically good faith and lack of
19
MR. MURPHY: Yes, sir, Your Honor.
19 criminal intent. Now, that requires, quite often, that
20
THE COURT: Sure.
20 the defendants testify about their beliefs about the law,
21
MR. MURPHY: Judge, there's just one other
21 and I want to tell the court that this is exactly what I'm
22 thing. Mr. Becraft has submitted some materials to me
22 going to do, and it will probably eliminate certain
23 that the defense is going to use in its presentation of
23 objections that Mr. Murphy is going to have. I'm going to
24 the case, and just so he's not waylaid, at some point I
24 get up -- when we get up and give our opening statements,
25 think it would be a good idea to sit down and talk about
25 I'm going to tell the jury that all she is going to
8
7
testify about is her beliefs about the law and that the
2 court is going to give the instructions on the law that is
2
(Jury panel in at 10:50 a.m.)
3 relative to this case. When we start getting into the
3
THE COURT: Ladies and gentlemen, I want to
4 meat of the defendant's motion, that's exactly what I'm
4 thank you for serving today as a juror. I know you're all
5 going to ask the defendant, you know, are you going to
5 just anxious to be here, right? How many people don't
6 testify about your beliefs about the law, and you
6 have power yet? Anybody? One person. Who is back there?
7 understand that the court is to instruct the jury on what
7 I'm going to let you go home if you want to. How are you
8 the law is itself. I think that giving that at least two
8 doing today?
9 or three times, especially coming from the defense,
9
PROSPECTIVE JUROR: I'm fine.
10 telling the jury in advance that she is just going to be
10
THE COURT: You would probably rather be here
11 testifying about her beliefs probably eliminates a lot of
11 because it's cooler. We got power about 8:30 last night
12 objections that come from the prosecution. And that's
12 so maybe you will get it today. I thought we were going
13 what I intend on doing. I'm going to do that in opening.
13 to be last in the city, but -- where are you located?
14 I'm going to tell the jury that we're going to be
14
PROSPECTIVE JUROR: Kirby and Mt. Moriah.
15 testifying about beliefs about the law, and I'm going to
15
THE COURT: I don't know, it has been really
16 tell the jury that you are going to instruct the jury on
16 slow, but maybe you will get your power today.
17 the law, and the defendant will, in front of the jury when
17
18 she testifies, in essence, say the same thing. But I
18 power for -- never lost power? Okay. All of you get to
19 think that addresses a lot of the government's objections.
19 be on the jury. How many of you were out of power for
20
20 more than a week? A lot of you. Yeah, how many more than
THE COURT: Okay. Well, as soon as we get our
Let me tell you, folks, how many people had
21 panel here, we'll start. I will go back and wait until
21 ten days? Yeah, I get to be in that group. More than
22 they get here. Be back as soon as they get here.
22 twelve days? Yeah, just two of us. Where are you --
23
THE CLERK: All rise.
23 where do you live?
24
(Recess taken at 10:45 until 10:50 a.m.)
24
PROSPECTIVE JUROR: Me?
25
THE COURT: Yes, ma'am.
25
10
9
PROSPECTIVE JUROR: Over off of Lamar.
2
THE COURT: Yeah, I know, we were really slow
in the jury box. And, Mr. Tuggle, you may need to move
2 that TV back just a little bit for folks so that the ones
3 getting our power back. You got it yesterday?
3 back there can see. The first person whose name is called
4
PROSPECTIVE JUROR: Yes.
4 will be asked to sit in seat number one. That's the seat
5
THE COURT: What time?
5 closest to me on the first row, and the second person in
6
PROSPECTIVE JUROR: This morning.
6 seat number two and so forth, all the way down to seat
7
THE COURT: You got it this morning?
7 seven, and then we're going to go to seat eight through
8
8 14. If your name is not called, that does not mean that
9
THE COURT: I got mine late last night, so they
9 you will not be called as a juror; it just means that
10 told me they were going to throw one more switch and see
10 we're going to ask these 14 individuals some questions.
11 if it came on, and actually it did.
11 Pay attention to the questions, though, as they're asked,
12
12 because you'll need to answer the same questions if your
Well, what we're going to do today is select a
13 jury in a criminal case and in order to do that, we're
13 name is called.
14 going to have to -- I was waiting on Mrs. Saba to get
14
15 here. We have to first swear you all in, and so if you
15 Larry Spurlin. Muhammad Salaam. William Vedder. Lee
16 will all stand and raise your right hand. Thank you.
16 Scott. Regina Starnes. Kay Gupta. Linda Saul. Andrew
17
17 Viverette. Jeffrey Stovall. Alphonso Smith. Frank
THE CLERK: Do you and each of you solemnly
THE CLERK: Lashaunda Vasser. Walter White.
18 swear that the answers to the questions to be propounded
18 Vickers. Keith Smith.
19 to you by the court in this case for which you may be
19
THE COURT: Who is our first juror?
20 drawn as a juror to be the truth, the whole truth and
20
THE CLERK: Lashaunda Vasser.
21 nothing but the truth, so help you God?
21
THE COURT: I need to ask you a few questions
22
THE JURY PANEL: I do.
22 about being a juror in a criminal case, and the first
23
THE CLERK: You may be seated.
23 thing I usually start out is -- I start with Ms. Vasser,
24
THE COURT: All right. What we're going to do
24 and I ask what do you think is the most important
25 is we're going to call 14 names and have them sit up here
25 characteristic for a juror. Think about it if you were
12
11
somebody sitting over there on the other side, what would
got an honest person who is able to assess the facts who
2 be most important for you about a jury, what would you
2 is open-minded and attentive.
3 want? Ms. Vasser, what's the most important
3
Is it Mr. Vedder?
4 characteristic for a juror to have?
4
PROSPECTIVE JUROR: Right.
5
PROSPECTIVE JUROR: Honesty.
5
THE COURT: Another characteristic for a juror?
6
THE COURT: That's good. Okay. I'm going to
6
PROSPECTIVE JUROR: Common sense.
7 make a list here.
7
THE COURT: Common sense. Actually, I will
8
8 give an instruction on that. You should have common
Let's go to Mr. White. Mr. White, what is
9 another characteristic?
9 sense. Apply your common sense.
10
PROSPECTIVE JUROR: The ability to assess fact.
10
Okay. Mr. Scott, another thing?
11
THE COURT: Ability to assess fact. All right.
11
PROSPECTIVE JUROR: I guess you could say be
12 I didn't get your name down right, so tell me your last
12 able to weigh the evidence.
13 name again.
13
14
PROSPECTIVE JUROR: Spurlin.
14 weigh the evidence. You know, it always gets a little
15
THE COURT: Spurlin, I knew I didn't have it
15 harder as we go along.
THE COURT: Be able to make a decision, to
16 right. Mr. Spurlin, what is another characteristic that
16
Ms. Starnes -- but we have left out a couple of
17 you would want in a juror?
17 big things, a couple of big things -- what would you want
18
PROSPECTIVE JUROR: To be open-minded.
18 as a juror?
19
THE COURT: Open minded.
19
PROSPECTIVE JUROR: To be impartial.
20
Is it Mr. Salaam?
20
THE COURT: To be impartial. We have still got
21
21 some to go. We have got an honest person who is able to
22
THE COURT: What is another characteristic of a
22 assess the facts who is open-minded, attentive, uses their
23 common sense, is able to weigh the evidence and is
23 juror?
24
PROSPECTIVE JUROR: Attentiveness.
24 impartial.
25
THE COURT: Attentiveness, okay. So we have
25
All right. And, Mr. Smith, another thing you
14
13
would want from a juror?
open-minded, attentive, uses their common sense, who is
2
2 able to weigh the evidence, who is impartial, a good
PROSPECTIVE JUROR: I would want someone to be
3 a very good listener.
3 listener, focuses on the case and who is not prejudice.
4
4 That's really a good list. I mean that's ten words which
THE COURT: A good listener, absolutely. Good
5 listener.
5 are really good descriptors, and usually when I get to the
6
All right. And, Ms. Vickers, something else?
6 point on somebody who is not prejudiced or -- and somebody
7
PROSPECTIVE JUROR: To be able to be
7 said impartial, which is another way of saying that, we
8 emotionally present here with what we're doing.
8 start talking about what ways can people be prejudice.
9
9 What ways are people sometimes prejudice?
THE COURT: Emotionally -- what do you mean by
10 that?
11
PROSPECTIVE JUROR: Well, to not have our
10
PROSPECTIVE JUROR: Race and religion.
11
THE COURT: Race and religion are common ways
12 thoughts and feelings about what's at home to be
12 in which people have prejudice. And, of course, it's
13 emotionally present.
13 inappropriate to consider them, but it is important to
14
14 know that they're out there. And both of them have been
THE COURT: To be -- to be focused on the case.
15 I'm going to say focused on the case because the other was
15 in the news a lot, so that's certainly -- certainly two
16 a little -- I have got you there. Focused on the case.
16 important ones.
17
Mr. Smith?
17
18
PROSPECTIVE JUROR: I would say someone that's
18 Viverette?
Well, are there other things that -- is it Mr.
19 not prejudiced against anything.
19
20
20
THE COURT: Mr. Viverette, other things that
THE COURT: Somebody who is not prejudiced,
21 exactly. Mr. Stovall, what is a kind of -- what types of
21 people can be prejudiced -- how old are you, Mr.
22 prejudice are we concerned about, because that's true --
22 Viverette --
23 Mr. Stovall, I'm going back to Mr. Stovall. Because, Mr.
23
PROSPECTIVE JUROR: Sixty-four.
24 Smith, we have got a long list now, and we're down to an
24
THE COURT: You're 64. Anybody ever prejudiced
25 honest person who is able to assess the facts, who is
25 because of age as far as you know? Maybe not, you have
16
15
PROSPECTIVE JUROR: Well, other than religion
never run into that. Ever heard about that, though?
2
PROSPECTIVE JUROR: Yes, I've heard of it.
2 and color?
3
THE COURT: Heard that people -- anybody older
3
THE COURT: Race, religion, age?
4 than 64? I think I have gotten my senior most panelist.
4
PROSPECTIVE JUROR: Gender could be another
5
5 one.
We will have to wait -- I will remember that.
6 I will remember that.
6
THE COURT: Gender?
7
7
PROSPECTIVE JUROR: Uh-huh.
8 because you're 64, because you're 60, because you're over
8
THE COURT: Do you think sometimes women are
9 55 --
9 treated differently than men?
Sometimes people will say you can't do the job
10
PROSPECTIVE JUROR: That's right.
10
PROSPECTIVE JUROR: I personally have not been,
11
THE COURT: -- whatever it is. And they don't
11 but I have seen other people.
12 look at you and see that you get around, you do -- you're
12
THE COURT: You think every football coach in
13 perfectly capable and healthier than a lot of people who
13 high school is automatically eligible to be the high
14 are 40. Some people might not look at that. So that
14 school principal?
15 would be a prejudice, a preconceived notion about
15
PROSPECTIVE JUROR: No.
16 somebody's ability simply based on age, and that's never
16
THE COURT: I'm not saying that's an area of
17 happened to you? Nobody has ever --
17 prejudice, but some people might say there does seem to be
18
18 sort of a disproportionate number of football coaches that
19
THE COURT: That's good. That's because you
19 who gets to be principals of high schools. That's not
20 don't look 64.
20 always true, and I don't want anybody to get that
21
PROSPECTIVE JUROR: Thank you.
21 impression.
22
THE COURT: I understand what you're saying
22
23 person.
23 there.
24
25 about?
THE WITNESS: Right, right. Depends on the
Ms. Saul, another thing people can be prejudice
24
THE COURT: But some people might say, well,
25 they didn't consider that female librarian, but they did
18
17
THE COURT: Okay. National origin. All right.
consider somebody else. So they looked at it and they
2 said that person can do a better job because of their
2 We have got a good set of things people can be prejudice
3 gender, maybe.
3 about.
4
4
PROSPECTIVE JUROR: Right. Depends upon the
Now, I'm going to have you pass that back to
5 person, whether it is male or female, just depends upon
5 Ms. Vasser. She is right in front of you.
6 their capabilities.
6
7
THE COURT: It does exist.
7 that you have to watch out what you want in jurors and
8
8 some things you don't want. You don't want people
9
THE COURT: That's possible. Now, I'm going
9 prejudice, and we went through some things there. I want
Ms. Vasser, we have got a good list of things
10 to -- is it Mr. Gupta?
10 you to do something. We have got five people over there.
11
11 We have got three people over there and two people over
12
THE COURT: Other types of prejudice? Where
12 there. One person out there is a defendant in this case.
13 are you from?
13 Can you look out there and tell me which one it is? You
14
PROSPECTIVE JUROR: I'm from India.
14 got the gentleman with the beard and the glasses on there
15
THE COURT: You're from India?
15 and the lady with -- got her hand on her -- all right --
16
16 chin on her hand. Gentleman with the red tie over there,
17
THE COURT: Nobody is ever prejudiced against
17 the lady that's blonde, lady right there, and the fellow
18 people who are not born in the United States, are they?
18 with the dark hair and glasses and another kind of darker
19 Sometimes they are.
19 red tie right there. Which one do you think is the
20
PROSPECTIVE JUROR: I hope not.
20 defendant? They all look eligible, don't they? I'm
21
THE COURT: You hope not. Hopefully, not you.
21 kidding you.
22 But it can be national origin too, is that a fair one to
22
23 put in the group?
23 worried because they're eyeballing me.
24
24
PROSPECTIVE JUROR: I would certainly like to
25 put that.
MR. MURPHY: Judge, I was starting to get
THE COURT: Okay. He kind of stood up and
25 threw you off there. He's still in the pool, we don't
20
19
want to leave him out. Who do you think the defendant is?
all look alike, I don't know. But you have a fellow with
2
2 a beard. All the men wore glasses, so that made it
PROSPECTIVE JUROR: I'm going to say the lady
3 in the black suit.
3 harder, you know. You had a mustache and a beard, that
4
THE COURT: Which one now?
4 makes that kind of hard to pick out. You had somebody who
5
PROSPECTIVE JUROR: Dark hair.
5 was a blonde lady, somebody who is -- so you went with the
6
THE COURT: The blonde?
6 brunette lady.
7
PROSPECTIVE JUROR: No, not the blonde.
7
8
THE COURT: The brunette?
8 agent. We do this for a very specific purpose, and that
9
PROSPECTIVE JUROR: Brunette.
9 is we all also judge people often on how they look.
10
THE COURT: Brunette is the one.
10
11
Why do you pick her out? Usually what happens
11 to you. Mr. White, you and I don't have much hair, right?
Okay. She is the IRS agent. She is the IRS
I'm going to hand that to Mr. White right next
12 is they pick out somebody who looks a little different.
12
PROSPECTIVE JUROR: That's correct.
13
PROSPECTIVE JUROR: Yeah.
13
THE COURT: People make assumptions about
14
THE COURT: That's the most common thing for
14 people who don't -- mostly good assumptions about people
15 people to do. We always have that -- now, I probably
15 who don't have much hair, I suppose. At least you and Mr.
16 threw you off, because usually people pick out if there's
16 Salaam and I all think the same on that. But they will
17 a guy with a beard, and Mr. Murphy stood up, they often
17 make assumptions about that, won't they?
18 pick out --
18
PROSPECTIVE JUROR: Correct.
19
19
THE COURT: And that's just not fair. Is it?
PROSPECTIVE JUROR: He stood up, so I
20 eliminated him.
20 It's not a fair way to proceed. And so what we have to do
21
21 is in order to get rid of prejudice, we have to stop
THE COURT: But if he had sat there -- often we
22 pick out somebody who looks a little different, and I'm
22 seeing that person as a person who has on, you know, a
23 not saying you look that different, but somebody who looks
23 black jacket, white -- kind of beige, that might be white,
24 somewhat different, so we had, you know, two red ties --
24 I just can't see very well. You know, we have to not make
25 we had three red ties, put the ties together, maybe they
25 a judgment. Now, I asked Ms. Vasser to do that because
22
21
THE COURT: It's difficult?
that's part of the illustration. She did exactly what I
2 wanted her to do, which is pick out somebody. In this
2
3 case, is it appropriate -- would it be unfair, though, to
3
THE COURT: Have you found yourself on occasion
4 judge anybody on how they appear?
4 sort of having prejudged somebody and found out you were
5
5 just wrong?
6
THE COURT: Okay. How do we avoid that, doing
6
PROSPECTIVE JUROR: On occasion.
7 that? Because the first thing we all do, we all know is
7
THE COURT: I mean --
8 we look around and we see somebody and we start making
8
PROSPECTIVE JUROR: I mean it's not often. I
9 judgments about that person, often very unfairly. Usually
9 have done it in the past.
10 completely unfairly, but we do that. How do we avoid
10
11 doing that in this case? How do we avoid judging people
11 somebody is a good guy, and they turn out not to be a good
12 based on appearance?
12 guy. You think somebody is a bad guy, and it turns out
13
13 they're not a bad guy.
PROSPECTIVE JUROR: By listening to the facts
THE COURT: Right. Sometimes you will think
14 of the case.
14
15
15
THE COURT: It's a natural thing for people to
THE COURT: That's exactly right, and you said
16 ability to assess facts earlier, which is exactly that.
16 assess things based on appearance, but in a case, in a
17 We listen to the evidence. We listen to the facts, and we
17 trial, if we always did that, who would always get off and
18 put aside preconceived notions about people based on
18 who would always get convicted? I'm going to ask Mr.
19 appearance, based on, you know, hair style, based on
19 Salaam, who would always get off if we just went on
20 anything else, we put those all out of our mind.
20 appearance and who would usually get convicted?
21
21
Do you think, Mr. Spurlin, that that is
PROSPECTIVE JUROR: Well, the wrong person
22 possible for people to do?
22 would get convicted, and the right person would walk.
23
PROSPECTIVE JUROR: I don't think always.
23
24
THE COURT: It's not always?
24 looking at people and just making a superficial
25
25 determination instead of looking hard at the evidence, and
THE COURT: Right, exactly, because we would be
24
23
we can all think about that that is just inherently unfair
here, and for those who didn't guess who is remaining, the
2 in our society. So that's what we're going to have to
2 lady right here is the defendant. Her name is -- we call
3 avoid today.
3 her Vernie Kuglin.
4
4
THE COURT: And it is K-U-G-L-I-N?
5 going to let you -- I'm going to now let you introduce
5
MR. BECRAFT: That is correct, Your Honor.
6 yourself and who is with you, and I'm going to let counsel
6
THE COURT: So it is Ms. Kuglin. Well,
7 for the defense introduce himself and those who are with
7 hopefully, that exercise was useful to all of you to go
8 him, and you're going to know who the parties are. But
8 through this process and say, you know, maybe we ought not
9 you're not supposed to judge them based on their
9 to judge a book by its cover, we ought to wait and see
10 appearance.
10 what the content is in the case, and that's -- we usually
11
11 try to go through that.
Now, I did mention -- and, Mr. Murphy, I'm now
MR. MURPHY: Thank you, Your Honor. My name is
12 Joe Murphy, ladies and gentlemen. I'm an assistant United
12
13 States attorney here in Memphis, Tennessee, and sitting
13 you a little bit about the case, because the government is
14 with me today will be Ms. Debbie White. She is an IRS
14 always -- in these criminal cases is always the party that
15 agent with the Criminal Investigation Division of the IRS.
15 goes first, and it is the government, and before we do
16 Thank you.
16 that, though, I'm going to go to Mr. Vedder, do you think
17
THE COURT: All right. Thank you, Mr. Murphy.
17 you should automatically believe the government because
18
And, of course, they represent the United
18 they are the government?
19 States.
Ladies and gentlemen, I'm going to need to tell
19
PROSPECTIVE JUROR: No, sir.
THE COURT: Okay. Now, do you have times in
20
Yes, sir.
20
21
MR. BECRAFT: May it please the court, my name
21 your life where you have not agreed with the government on
22 is Larry Becraft. I'm an attorney that is here to
22 things?
23 represent the defendant in this case. I also have a
23
24 friend of mine that is going to be helping me. He's a
24 military, sir.
25 lawyer. His name is Bob Bernhoft. This is the man right
25
PROSPECTIVE JUROR: I spent 24 years in the
THE COURT: You always agreed with the
26
25
THE COURT: For the VA Hospital?
government, is that right? But now -- you're retired now,
2 right?
2
3
PROSPECTIVE JUROR: Yes, sir.
3
THE COURT: Are you retired now?
4
THE COURT: So now you can disagree with them
4
PROSPECTIVE JUROR: Well, on occasion, I kind
5 if you want to.
5 of had a small problem.
6
6
7
THE COURT: All right. Would you hesitate to
7 retired?
THE COURT: Okay. Are you retired -- you're
8 disagree with the government if you thought that the
8
PROSPECTIVE JUROR: Because of that.
9 evidence, which is what we have been talking about all the
9
THE COURT: We can talk about it if we need to.
10 time, the way we have to decide this case, said that you
10 Does that mean that you're -- since you worked for the VA
11 didn't believe the government theory? Now, it's not a
11 for a long time, actually longer than Mr. Vedder was in --
12 matter of personally -- the lawyers don't know anything
12 which branch of the service were you in, Navy, Mr. Vedder?
13 personally in the case, so it's not a matter of believing
13 Which branch of the service were you in?
14 or disbelieving one of the attorneys, but will you decide
14
PROSPECTIVE JUROR: Army.
15 this case solely on the evidence and not decide it for the
15
THE COURT: Army. Okay, Army.
16 government just because it is the government?
16
And we have got the VA. Mr. Scott, are you
17
17 going to, again, just like Mr. Vedder, be able to decide
PROSPECTIVE JUROR: Strictly on the evidence,
18 the case based on the evidence and not be inclined to just
18 sir.
19
THE COURT: Right. And you see the importance,
19 agree with the government, which, of course, you worked
20 everybody has got to be able to do that.
20 for the government also all these years?
21
21
PROSPECTIVE JUROR: Yes, I will be able to.
22 you ever had a disagreement with anybody in government?
22
THE COURT: If the government does not prove
23 Maybe not.
23 the case beyond a reasonable doubt, you understand that
24
24 you have to decide for the defendant?
Now, hand that to Mr. Scott. Mr. Scott, have
PROSPECTIVE JUROR: I worked 31 years for the
25 VA Hospital.
25
PROSPECTIVE JUROR: (Nods head up and down).
28
27
THE COURT: Okay. That's right.
2
All right. And then we go to Ms. Starnes. Ms.
going to ask -- you said you need to be a good listener in
2 the case. Do you agree -- one thing we didn't talk about
3 Starnes, who do you work for?
3 is a person has to be very patient in deciding the case
4
PROSPECTIVE JUROR: Medical doctors.
4 because you have to wait until the end of all the
5
THE COURT: Okay. Physicians. Which group?
5 evidence. You can't decide the case as you go along. Can
6
PROSPECTIVE JUROR: Raleigh Cordova Medical
6 you do that in this case? You have to wait until you hear
7 Group.
7 it all, and then you hear Mr. Murphy's final argument and
8
8 you hear Mr. Bernhoft's final argument, and then you get
THE COURT: Okay. Well, do you have any
9 problem with the fact that you might have to disagree --
9 my instructions on the law, and then you decide the case,
10 well, you have no obligation to agree with the position of
10 can you wait that long? You have got to wait a long time
11 the government, just because it is the government; does
11 in these cases.
12 that make sense to you?
12
13
13 to.
14
THE COURT: Okay. And if Mr. Murphy presents
14
PROSPECTIVE JUROR: Yes, Your Honor, you have
THE COURT: Absolutely, because you don't know
15 proof beyond a reasonable doubt on the issues in this
15 all the evidence until you've weighed it and heard
16 case, then, of course, you have to find the defendant
16 everything. If you decide it based on the first witness,
17 guilty, but if they fail to do that, you have to find the
17 well, that would just be fundamentally unfair.
18 defendant not guilty. Is that -- is that something you
18
19 can live with?
19 little bit about the charges in the case, and then I'm
20
20 going to let the lawyers ask some questions in the matter.
21
THE COURT: Okay. You now understand we're
21 I am going to -- anybody ever had a dispute with the IRS?
All right. Well, I'm going to tell you a
22 going to decide this case solely on the case, not on those
22 Or y'all just happily pay your taxes? All right. You
23 other things we shouldn't consider, and we're going to be
23 know, I do want you to tell me later on if you have had a
24 that kind of juror that we have all outlined here today.
24 dispute with the Internal Revenue Service or something
25
25 like that, it's relevant. It doesn't mean that you can't
I'm going to hand it back to Mr. Smith. I'm
30
29
PROSPECTIVE JUROR: I think that's a natural
be a good juror, in fact, you might be a better juror for
2 it, but it's something we would want to know about. I'm
2 thing to -- if they're there, that possibly they have.
3 going to tell you a couple of things. There are -- there
3
4 is more than one count in this indictment and there's
4 totally inappropriate. Does it seem also possible to go
5 going to be some critical language. I'm going to read the
5 back to neutral and say that's totally inappropriate to
6 indictment one time right now. I may refer back to it
6 give that any weight at all?
7 later on and refer back to portions of the indictment; and
7
8 at the end of the case, you will get a copy of the
8 question, let me say, even though I haven't had any
9 indictment, you'll get a verdict form, and you'll get a
9 personal whatever with the IRS, but I have worked in an
10 written set of instructions as well as oral instructions
10 accounting office 18 years for a CPA firm that had
11 which I'm required to give you.
11 interaction, and because of this, I know a lot of times
12
12 people get put in those situations and they're not guilty.
Now, the fact that somebody has been indicted
THE COURT: But you remember when -- it's
PROSPECTIVE JUROR: Yes, sir. And your last
13 does not mean anything about their guilt or innocence.
13
14 It's simply a way of telling you what the charges are. If
14 never worked in a CPA office, but I will accept your word
15 we didn't have this mechanism, the defendant would have no
15 on that.
16 way to know how to prepare to confront the charges at
16
17 trial, so it's a matter of fairness to a defendant. It is
17
THE COURT: The point being, though, that
18 not -- and it's a matter of notice to you and me as to the
18 everybody starts out with a clean slate. Nobody has any
19 nature of the charges, but it is not evidence at all.
19 black marks on it, you don't get a black mark on it or a
20
20 negative mark on it for having been charged with an
Now, is the fact that somebody has been
THE COURT: Right. And I assume -- I have
21 indicted, Mr. Smith, something that would cause you to
21 indictment. You're entitled to a jury that will not start
22 start to make up your mind -- and I think it's -- well,
22 out with preconceived notions about your guilt, or for
23 Ms. Vickers, I'll ask you, is it something that would
23 that matter, your innocence. Well, they have to have a
24 cause you making up your mind, somebody has been indicted,
24 preconceived notion about your innocence, you're innocent
25 they must have done something wrong?
25 until proven guilty. They start out, this person is
32
31
innocent, and the government has to prove beyond a
the sum of approximately $162,883.75, that well knowing
2 reasonable doubt that they're guilty.
2 and believing the foregoing facts, the defendant on or
3
3 about April 15th of 1997, in the Western District of
All right. Let me tell you -- I'm also going
4 to tell you that there are six charges in this case --
4 Tennessee, did un-- did willfully attempt to evade and
5 counts, and the number of counts is also not important.
5 defeat said income tax due and owing by her to the United
6 You can't say, well, had it been one, I wouldn't have been
6 States of America for said calendar year by failing to
7 bothered, but there's six. Otherwise, how would the
7 make an income tax return on or before April 15, 1997, as
8 government always assure a conviction, Mr. Smith, if the
8 required by law, to any proper officer of the Internal
9 number of counts made any difference? They would just
9 Revenue Service and by failing to pay the Internal Revenue
10 charge with you a bunch of counts, wouldn't they?
10 Service said income tax, in violation of Title 26, United
11
11 States Code, Section 7201.
12
THE COURT: Right. And that would not be a
12
Count 2. That during the calendar year 1997,
13 fair way for our system to proceed. So that -- we know
13 the defendant, Vernice B. Kuglin, had and received taxable
14 that on each count, a person is presumed innocent, and the
14 income in the sum of approximately $147,999.60, that well
15 government has to prove that count, and the facts that
15 knowing and believing the foregoing facts, the defendant
16 support that count beyond a reasonable doubt even. If
16 on or about April 15, 1998, in the Western District of
17 they prove another count beyond a reasonable doubt, that
17 Tennessee, did willfully attempt to evade and defeat the
18 still doesn't prove that particular point. So each one is
18 said income tax due and owing by her to the United States
19 considered separately and independently.
19 of America for said calendar year by failing to make an
20
20 income tax return on or before April 15, 1998, as required
Okay. Well, this is what the indictment says.
21 Count 1. That during the calendar year 1996, the
21 by law, to any proper officer of the Internal Revenue
22 defendant, Vernice B. Kuglin.
22 Service by failing to pay the Internal Revenue Service an
23
MR. BECRAFT: Kuglin, Your Honor.
23 income tax, and by filing a false recall Form W-4 in 1997,
24
THE COURT: Kuglin. I'm going to try to get
24 in violation of Title 26, United States Code, Section
25 that right. Ms. Kuglin had and received taxable income in
25 7201.
34
33
Count 3. That during the calendar year, 1998,
said income tax, and by filing a false Form W-4 in 1999,
2 in violation of Title 26, United States Code, Section
3 7201.
4
5 on or about April 15th of 1999, in the Western District of
5 defendant, Vernice B. Kuglin, had and received taxable
8 on or about April 15, of 2000, in the Western District of
11 Service, by failing to pay the Internal Revenue Service
12 said income tax, and by filing a false W-4 -- Form W-4 in
13 1998, in violation of Title 26, United States Code,
14 Section 7201.
15
15 said income tax and by filing a false Form W-4 in 2000, in
Count 5. That during the calendar 2000, the
16 violation of Title 26, United States Code, section 7201.
17
21 on or about April 15th of 2002, in the Western District of
36
35
by law, to any proper officer of the Internal Revenue
so, I'm going to go to your colleague right next to you,
2 Service by failing to pay the Internal Revenue Service
2 our senior member of the panel, Mr. Viverette, and how do
3 you not prejudge these charges? How do you avoid -- is it
4 violation of Title 26, United States Code, Section 7201.
4 hard to do, hard not to prejudge?
5
Well, six counts, basically, saying pretty much
5
PROSPECTIVE JUROR: Yes, sir. Yes, it is.
6 the same thing, not exactly the same thing each time.
6
THE COURT: It's hard.
7 Sometimes something involving a Form W-4, sometimes not,
7
PROSPECTIVE JUROR: With the amount of charges,
8 for the years '96, '97, '98, '99, 2000, 2001.
8 of course.
9
9
Well, now, you all agreed that you wouldn't
THE COURT: It's a hard thing to do. You know,
10 decide the case without hearing the evidence, and I just
10 if it is one charge, you sort of feel one way. I warned
11 read you the indictment and now you're sitting there
11 you about that, you know, one easier to deal with, six a
12 thinking some things, right? And the important thing to
12 little harder, and yet that is why it is so important. So
13 remember about an indictment is that it is just a charge.
13 how are we going to overcome this sort of hole that, you
14 It's awfully hard to do, because the inclination of every
14 know, I dug? I got you out of the hole and we all started
15 human being is to do what? Let's see, I'm going to
15 out nice and even, and then I read you the indictment, how
16 mispronounce it, Mr. Stovall -- it's Jeffrey?
16 do we get out of that hole and get back to where we're
17
PROSPECTIVE JUROR: Stovall.
17 supposed to be, which is requiring the government to prove
18
THE COURT: I'm sorry, Mr. Stovall. What's the
18 its case beyond a reasonable doubt and giving the
19 natural inclination after hearing six somewhat repetitive
19 defendant the presumption of innocence that the law
20 charges for different years on a failure to file income
20 requires, how do we do that?
21 tax return case -- I'm generally characterizing it that
21
22 way, what is the natural inclination for most people to
22 try to judge, you know, from the evidence.
23 do?
23
PROSPECTIVE JUROR: Listen to the evidence and
THE COURT: I mean that's a great answer.
24
PROSPECTIVE JUROR: Prejudge.
24 That's the answer. I mean you just say, hey, I heard
25
THE COURT: Say, my goodness, you know -- and
25 something, and it's not evidence. I heard something, and
38
37
it's not evidence, and you get your antenna tuned up
the facts and whatnot, and hopefully --
2 because you know what you're going to have to listen for,
2
THE COURT: I'm sorry, go ahead.
3 but you haven't heard any evidence yet. Exactly.
3
PROSPECTIVE JUROR: And, hopefully -- we have
4 Exactly. Do you think people can really do that, Ms.
4 to hear all those facts and keep on hearing those and no
5 Saul?
5 judgment until the case -- all the facts are heard.
6
PROSPECTIVE JUROR: I think that they can. In
6
THE COURT: Exactly. Now, you have raised a
7 some cases, it might be a little difficult, but I think
7 really important point, and I'm glad you did, because the
8 that they could if they just let -- left their emotions
8 interesting thing about our system, and it's different
9 out and just weighed the evidence and the facts of the
9 from many systems, it is different from the Belgium system
10 case to seek the truth and come to a good conclusion.
10 and the French system and parts of the German system, it
11
11 depends on what system you're in, is that the defendant
THE COURT: I think you're right, I think it is
12 a little -- I think it's fairly difficult, but we got to
12 actually never has to present anything at all. The
13 do it, we got to do it in this case.
13 government always has the burden of proof, and while there
14
14 may be things that they present, there may not be things
Mr. Gupta, can you do that in this case, can
15 you start out on an even -- you know, this person is
15 that they present, the government always has the burden of
16 presumed innocent, they're innocent, there's nothing on
16 proving each count beyond a reasonable doubt. So we have
17 that slate? I don't have any bad marks written on there,
17 got to be a little careful there. I'm going to fine tune
18 can you do that in this case?
18 your response just a little and say that every person is
19
19 entitled to be represented. The defendant is certainly
20
THE COURT: Okay. How did you go through that
20 represented in the case, but she is not required to put
21 process of eliminating hearing that indictment, sort of
21 any proof on, is that -- is that going to make it
22 the effect of hearing charges, how do you deal with that?
22 difficult for you, Ms. Vasser, in terms of how you listen
23
23 to the case? She is right in front of you. She is right
PROSPECTIVE JUROR: Well, basically, I believe
24 that the defendant is going to try to present a case from
24 there in front of you. The fact that you know that she is
25 his opinion exactly all the details, whatever it is, and
25 not obligated to present any proof. Now, they may -- they
40
39
may tell you they will, but they are never obligated to,
them up.
2 is it still possible for you to keep that frame of mind,
2
3 innocent until proven guilty --
3 heard everything that you have heard, now do you think you
4
4 can be a fair and impartial juror in this case and try
5
THE COURT: -- knowing that? Does it make
5 this case solely on the evidence, or is there something
But let's go to Mr. White, Mr. White, having
6 sense that we don't require defendants to -- we don't
6 you need to tell me about now either now or in person at
7 require them to testify or give any evidence at all, does
7 the side bar about why you might not be able to do that?
8 that make sense?
8
9
PROSPECTIVE JUROR: Yes, it does.
9 impartial in this case.
10
THE COURT: Because it would be a very coercive
10
PROSPECTIVE JUROR: I believe I can be fair and
THE COURT: All right. And let's ask Mr.
11 system. The system would be very coercive if we could
11 Spurlin, can you be fair and impartial in this case, try
12 make people get up there and testify, it would take the
12 the case as we've talked about how to try it?
13 burden partly away from the government, and that would be
13
14 wrong. I mean the government has the burden no matter how
14
THE COURT: And Mr. Salaam, can you do that?
15 we look at it, they have the burden of proof.
15
PROSPECTIVE JUROR: Yes, I can.
16
16
THE COURT: Mr. Vedder, can do you that?
17 through what a juror needs to be. I'm going to run down
17
18 the rest of the list, and make sure everybody -- and then
18
THE COURT: Mr. Scott, can you do that? You
19 I'm going to tell the schedule. I'm going to see if
19 want to talk to me at side bar?
20 anybody has got a problem with the schedule. This case is
20
PROSPECTIVE JUROR: Kind of.
21 going to take a few days to try. Whether it is three days
21
THE COURT: I can tell that. We'll talk up
22 or four days or five days, it's going to be at least in
22 here in just a second.
23 that range. Never can tell for sure. These are like
23
24 medical procedures, you know, if they start, they just go
24 that in this case?
25 until they're over, you can't do anything about shortening
25
I have done a couple of things. We've gone
Let me ask Ms. Starnes, Ms. Starnes, can do you
42
41
THE COURT: And, Mr. Smith, can you do that?
usually from 12:30 until 2:00. That won't seem -- once
2
PROSPECTIVE JUROR: Yes, I could.
2 you have taken that long lunch break, you will appreciate
3
THE COURT: Ms. Vickers, can you do that?
3 that that is a good break for us, but then on Tuesday,
4
4 Thursday, we take a short lunch break, it is an hour lunch
5
THE COURT: And, Mr. Smith, can you do that?
5 break. It is actually a pretty good schedule, it's pretty
6
6 tight. We will stay in this case until a little after
7
THE COURT: And, Mr. Stovall, anything you need
7 5:00 each day. We won't stay real late. This is not --
8 to talk to me about or can you do that?
8 just like, frankly, all your comments were really good,
9
9 and attentiveness and being able to focus on the case are
10
THE COURT: Mr. Viverrette, can you do that?
10 the type of things that require we not keep you just for
11
11 hours and hours. You have to be able to have a reasonable
12
THE COURT: And I think we have asked Ms. Saul,
12 day, and we recognize that, so that's what we'll do. I
13 I will ask you again, can you do that?
13 expect the case to be a three to five-day case, I could be
14
14 wrong. It could be a two-day case, which isn't likely,
15
THE COURT: And I'm going to ask Mr. Gupta
15 but it could also be a six-day case, which probably isn't
16 again just to make sure we have got everybody.
16 likely either, but I can't tell you in advance. So you
17
PROSPECTIVE JUROR: Yes, I can do that.
17 have to be available for that period of time. This is
18
THE COURT: All right. Let me tell you a
18 Monday, we will go through Friday, and we can be back next
19 couple of things, and then I'm going to talk briefly with
19 Monday, if we need to. That's not a problem. I expect
20 Mr. Scott at the side bar. The case will be tried on a
20 the proof will probably be over in four days, though, that
21 schedule, we will usually start in here about 9:00
21 would be my absolute guess. I mean by Thursday. Mr.
22 o'clock. It may be 9:30, it depends on the schedule for
22 Murphy, the government will probably end a little before
23 each morning. We usually have some things earlier, but as
23 that?
24 the case starts, we try to condense them. On Monday,
24
MR. MURPHY: Judge, I anticipate that.
25 Wednesday, Friday, we take a longer lunch break, it is
25
THE COURT: We never ask the defense how long
44
43
(The following proceedings had at side-bar
the proof is going to be, you know, because they're not
2 required to put any proof on, because it's not fair to
2 bench.)
3 them. If you want to tell us, it's okay, but we don't
3
4 really ask.
4 dispute with Internal Revenue, plus my wife is an
5
5 employee, and she used to work as Internal Revenue
MR. BECRAFT: Your Honor, I am going to try to
PROSPECTIVE JUROR: See, right now, I'm in
6 finish, if Mr. Murphy finishes Tuesday afternoon or
6 employee.
7 Wednesday morning, I hope to have the case concluded, at
7
THE COURT: You're in dispute with the IRS?
8 latest, by noon on Thursday, the proof.
8
PROSPECTIVE JUROR: Yes, kind of. I'm paying
9
9 them back. But, see, my wife, she works for IRS.
THE COURT: So that's going to be our
10 objective. That's good. We all kind of know where we are
10
11 on the case. The reason I'm telling you those things is
11 in this case because of that?
12 that if you have got a nonrefundable trip and you're
12
13 supposed to be on vacation next Monday, it's not the case
13 you know.
14 for you. You need to be available that long, probably
14
THE COURT: Make you feel --
15 won't be that long, but if you have got a commitment that
15
PROSPECTIVE JUROR: Feel a little
16 you have to meet, then this is not the case for you. I
16 uncomfortable.
17 think they have given you the best estimate. That's the
17
18 best they can do. Anybody who has a problem on the
18 to be excused?
19 schedule?
19
MR. MURPHY: Judge, I don't have any.
20
20
MR. BECRAFT: No.
21 to -- Mr. Scott will be our illustration about coming to
21
THE COURT: We're going to let you be excused.
22 the side bar. I'm going to have you come around to side
22 Thanks for coming and telling me about it. Thank you.
23 bar. If you can just walk in front, it's fine. And we
23
24 hit some white noise then, so that -- let you have a
24 court.)
25 private conversation at the side.
25
Okay. Well, I'm going to have -- I'm going
THE COURT: Do you think you should not a juror
PROSPECTIVE JUROR: Well, it would kind of --
THE COURT: Any objection to allowing Mr. Scott
(The following proceedings were had in open
THE COURT: We're going to let Mr. Scott be
46
45
PROSPECTIVE JUROR: In the a.m., in the
excused, and we will draw another name. Yes, sir.
2
PROSPECTIVE JUROR: Can I have -- because I
2 afternoon, and in the p.m., three times.
3 have a medical condition, can I have some question that we
3
4 ask?
4 with you today?
5
THE COURT: Sure. Why don't you -- you want to
5
THE COURT: Okay. And did you bring insulin
PROSPECTIVE JUROR: I have not brought insulin
6 talk to me at side bar or you want to tell me -- you can
6 with me today, I did not think that I was going to need it
7 come around to side bar.
7 for the lunch time today because sometimes I can manage
8
8 without that.
PROSPECTIVE JUROR: Can I come around to side
9
9 bar?
10
THE COURT: Yes. We're going to call that
THE COURT: Okay. Will you bring insulin just
10 in case you need it? We will always take a --
11 other name right now so we can fill that seat so the
11
12 lawyers will know who will be seat six.
12
THE COURT: You administer your own shot?
13
THE CLERK: Marlow Smith.
13
PROSPECTIVE JUROR: Yes, I do.
14
THE COURT: Yes, sir, if you will come around
14
THE COURT: Okay. How are you feeling today?
15 over here.
15
PROSPECTIVE JUROR: Fine.
16
16
THE COURT: Okay. We have a general policy
17 bench.)
17 that if somebody has a condition that can be managed, we
18
THE COURT: Mr. Gupta, yes, sir.
18 do not want to exclude them from the panel.
19
PROSPECTIVE JUROR: I'm a diabetic patient,
19
PROSPECTIVE JUROR: I see.
20 insulin dependent. Sometimes things can happen without my
20
THE COURT: If you think it's -- that you
21 control. I am not sure when the things will be happening.
21 can't -- cannot serve, if you think it's going to be a
22 I take shots.
22 problem, then I would want you to tell me, but we are
23
THE COURT: Let me ask this.
23 going to try to help you out if there is any --
24
PROSPECTIVE JUROR: Okay.
24
25
THE COURT: How often do you take a shot?
25 just developed that condition the last few months, six
PROSPECTIVE JUROR: I will prefer because it's
48
47
months, but I've been a diabetic for the last 25 years. I
be excused. We will seat somebody else in seat number
2 can handle it, don't get me wrong, but I may not be sure,
2 eight.
3 and I would just feel much comfortable if I don't have to
3
THE CLERK: Barbara Snodgrass.
4 do that.
4
THE COURT: Mr. Smith, how are you?
5
5
PROSPECTIVE JUROR: Doing fine.
6 jury at this time?
6
THE COURT: Been in any big fights with the
7
7 IRS?
THE COURT: If you don't have to serve on the
PROSPECTIVE JUROR: I'm going to be honest with
8
9
THE COURT: All right.
10 pump, but you use the shots?
10
PROSPECTIVE JUROR: Don't make enough money.
11
PROSPECTIVE JUROR: I use the shots.
11
THE COURT: Well, I think a lot of -- we all
12
THE COURT: Mr. Murphy, I'm inclined if
12 feel that way sometimes. Let me ask this -- you raise a
8 you.
9
THE COURT: Okay. You do not use the insulin
13 somebody thinks it's a problem --
13 great point, though, you really do. We talked about ways
14
MR. MURPHY: Judge, I have no objection.
14 people can discriminate against folks. We talked about
15
MR. BECRAFT: None, Your Honor.
15 people of different gender, we talked about appearance
16
THE COURT: We ought to let you be excused. I
16 because that was really important and a really obvious
17 understand it has gotten a little more difficult lately?
17 thing to talk about. We talked about -- let's see, Mr.
18
18 Stovall mentioned race and religion, Mr. Viverette
19
THE COURT: Is that right?
19 mentioned age, Ms. Saul, gender, Mr. Gupta had mentioned
20
20 national origin, different things. Do you think people
21
THE COURT: We're going to let you be excused.
21 can treat people differently because of their economic
22
PROSPECTIVE JUROR: Thank you very much.
22 status?
23
23
PROSPECTIVE JUROR: I'm sure it does happen.
24
THE COURT: Would that be right in a court of
24 court.)
25
THE COURT: We're going to allow Mr. Gupta to
25 law for somebody to be treated differently because of
50
49
PROSPECTIVE JUROR: No, it wouldn't.
their economic status?
2
PROSPECTIVE JUROR: It's not right anywhere.
2
THE COURT: Right. And that is an important
3
THE COURT: It's not. And that can be both --
3 concept here, just -- it's the same kind of preconceived
4 that can be -- you think it can apply to both people who
4 notion or anything else. The government's burden doesn't
5 make more money and people who make less money?
5 change because of your income level. In other words, if
6
PROSPECTIVE JUROR: I'm sure it can.
6 you make $50,000, if you make -- you know, $24,000, you
7
THE COURT: It could be?
7 have to pay income tax just like everybody else, you know.
8
PROSPECTIVE JUROR: And I do in my life.
8 In fact, I can't remember the scale, but it varies, it
9
THE COURT: Maybe I didn't say that very well.
9 varies a good bit. If you make $50,000, you have to pay
10 Would it be right to treat -- to hold the government to a
10 income tax, if you make a hundred thousand dollars, you
11 lower standard in this case for Ms. Kuglin because she has
11 have to pay income tax. And the obligation to file that
12 got some fairly large -- pretty large numbers associated
12 tax return doesn't change because of your income. I'm
13 with those income years, would that be wrong just to say,
13 saying this in general, I know that there may be some
14 well, she made a bunch of money, you know, she must have
14 exceptions there, but as a general proposition, you got to
15 done wrong, would that be fair?
15 file. Anybody -- you know, I'm not going to ask everybody
16
PROSPECTIVE JUROR: No, Huh-uh.
16 now, I'm going to tell you, don't raise your hand, but in
17
THE COURT: Okay. And that's the same kind of
17 the last five years, have each of you filed an income tax
18 preconceived notion, the idea that we're always concerned
18 return each year? I'm not going to ask too many questions
19 about is -- if Bill Gates was here and his income, I don't
19 because somebody may not be old enough to have paid income
20 know what he makes, you know, Bill Gates was here and -- I
20 taxes in a couple of those years, and there's some income
21 don't know what he makes, I have no idea, and he made a
21 limits on that too, but most everybody up there has filed
22 billion dollars, he makes a lot of money, I don't know
22 an income tax return, at least one in the last couple of
23 what he makes, he makes enough money to last us for
23 years. Now, everybody on the -- I can't remember if
24 awhile, would it be fair to convict him just because he
24 you're a student if you have to file one or not. Do you
25 made a billion dollars?
25 have to file one if you're a student, Mr. Murphy?
52
51
MR. MURPHY: Judge, it would depend on your
income tax return, but her income had been $18,000, but
2 income.
2 I'm going to treat her differently because I believe her
3
3 income was in excess of a hundred thousand dollars, would
THE COURT: It would depend on your income.
4 But by and large, most everybody up there has probably
4 that be wrong?
5 filed an income tax return. So anybody got to rule
5
6 against the defendant because she looks like she made over
6 yes, it would be wrong.
7 a hundred thousand dollars each year?
7
8
8 otherwise -- Mr. Murphy, this is basically a failure to
Okay. What about that, Ms. Vasser, you going
PROSPECTIVE JUROR: To treat her different,
THE COURT: It would be wrong, because this
9 to rule against her -- you say, well, she must be guilty,
9 file case, I don't want to misstate it.
10 they say she made over a hundred thousand dollars each
10
11 year. We will pass it down to Ms. Vasser.
11 Honor.
12
12
THE COURT: It's an evasion.
13
THE COURT: Okay. And that's important. And,
13
MR. MURPHY: And as part of that scheme, we're
MR. MURPHY: Well, it is an evasion case, Your
14 Mr. White, are you going to rule against her just because
14 alleging failure to file and false W-4.
15 she seems to have a pretty good size number beside her
15
16 name?
16 supposed to file and she didn't file, and she did some
17
PROSPECTIVE JUROR: No, sir, it should not make
THE COURT: They're saying she knew she was
17 things on some occasions to not file, to avoid it. But we
18 a difference.
18 can't just look at the number and reach a conclusion. Any
19
19 problem with that, Mr. Salaam?
THE COURT: It really shouldn't, that's not
20 what the government is trying to prove there. They're
20
21 going to have to prove some numbers here, but that's not
21 case under 7201, so it doesn't have anything to do with
22 the key thing.
22 the amount, it's a legitimacy of an evasion.
23
23
What about that, Mr. Spurlin, are you going to
PROSPECTIVE JUROR: No. This is an evasion
THE COURT: Boy, you have got it down, thank
24 say, well, you know, it would be one thing if she made --
24 you. We just got to hear the proof on that.
25 I don't know, if she had -- if she was supposed to file an
25
Mr. Vedder, can you -- are you going to be
54
53
influenced by that number?
to treat -- you know, we take an oath, a lot of us do, to
2
2 treat the wealthy -- the rich and poor alike is what it
PROSPECTIVE JUROR: No. Numbers don't make any
3 difference, sir.
3 says on a lot of these things, and I don't know if the
4
4 plaintiff will be offended if we said rich, because it's a
THE COURT: Okay. We're going to look at the
5 actual proof on the issues that are going to be before the
5 very relative thing, but can we treat everybody the same
6 court.
6 in this case and decide the issues in this case
7
We have already asked Mr. Smith. Mr. Smith,
7 irrespective of the numbers involved, pretty much?
8 what do you do?
8
PROSPECTIVE JUROR: Yes, I could, Your Honor.
9
PROSPECTIVE JUROR: Right now, I'm a golf pro?
9 It will be based on the evidence.
10
THE COURT: You're a golf pro?
10
11
PROSPECTIVE JUROR: Yes, ma'am -- yes, sir.
11 okay with you?
12
THE COURT: What happened to the golf course
12
THE COURT: All right. Ms. Vickers, is that
PROSPECTIVE JUROR: That's fine. It's not
13 you usually work with the storm?
13 about the money, but the evasion.
14
14
PROSPECTIVE JUROR: Well, only one limb fell
THE COURT: And, Mr. Smith, is that okay with
15 off of one tree.
15 you?
16
THE COURT: Where you are a golf pro?
16
17
PROSPECTIVE JUROR: Southaven Golf Center.
17
THE COURT: And Mr. Stovall?
18
THE COURT: Okay. You were lucky, you were
18
19
THE COURT: And Mr. Viverette?
20
PROSPECTIVE JUROR: I agree it's the evasion
19 lucky.
20
Ms. Starnes, is that number going to be
21 something that's going to overwhelm your ability to decide
21 for not filing taxes.
22 the issues that are really going to be before us, the
22
THE COURT: Exactly. And Ms. Saul?
23 evasion question?
23
24
24
THE COURT: Okay. You final -- we have got
25
THE COURT: Mr. Smith, are you going to be able
25 down to our new juror, now, it's Ms. Snodgrass, is that
56
55
THE COURT: Long list there. Did you agree
right?
2
2 with those?
3
THE COURT: How are you today?
3
PROSPECTIVE JUROR: I did.
4
PROSPECTIVE JUROR: I'm fine, thank you.
4
THE COURT: Okay. And what about the prejudice
5
THE COURT: What do you do?
5 questions and prejudging questions, any problem with the
6
PROSPECTIVE JUROR: Flight attendant, and I
6 fact that we cannot prejudge the case, any problem with
7 also run an animal rescue organization.
7 those?
8
THE COURT: What kind of animals?
8
9
PROSPECTIVE JUROR: Dogs and case.
9 that, no.
10
THE COURT: Dogs and cats. There's one that
10
PROSPECTIVE JUROR: I don't have a problem with
THE COURT: Can you give the defendant the
11 just does dogs. Is it Mews? What does Mews do?
11 presumption of innocence that the law requires? And you
12
PROSPECTIVE JUROR: House of Mews does cats.
12 heard me read the charges, so that was one of the things
13
THE COURT: They do cats?
13 we went through this process about. Can you give the
14
14 defendant the presumption of innocence that the law
15
THE COURT: But you do dogs and cats?
15 requires?
16
PROSPECTIVE JUROR: We do dogs and cats.
16
17
THE COURT: Which -- where?
17 going to have to show the reason, so, yes.
18
PROSPECTIVE JUROR: Here in Memphis.
18
19
THE COURT: On Central?
19 to give somebody that blank slate.
20
PROSPECTIVE JUROR: No, we do it out of our
20
21 homes. We have foster homes. People who will take them
21
THE COURT: Can she really start out with a
22 into their homes and keep them.
22 blank slate with nothing written on it, even though we
23
23 have got those charges there, nothing written, no black
THE COURT: Okay. All right. Well, you've
PROSPECTIVE JUROR: I feel the government is
THE COURT: But it's a question of being able
24 heard what everybody said about qualities of a good juror?
24 marks, anything like that?
25
25
PROSPECTIVE JUROR: Yes, I have.
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57
PROSPECTIVE JUROR: We were audited a few years
THE COURT: Okay. Mr. Murphy -- and I do have
2 a bunch of other things, but I'm going to let you go
2 ago also.
3 ahead.
3
MR. MURPHY: Okay. And how do you feel about
4
4 the audit? Do you think you were treated fairly or
5
How are you, ladies and gentlemen, doing today?
5 unfairly?
6 My name is Joe Murphy, and I'm a prosecutor in the
6
7 U. S. Attorney's office here in Memphis, and I have got
7 checked it over and so forth, they proved that, you know,
8 some questions that I would -- or some things that I would
8 we had to pay, in other words.
9 like to talk with you about before we begin.
9
MR. MURPHY: So you had to pay some extra tax?
10
10
11 I didn't stand up here and say a lot of people have strong
11
MR. MURPHY: Do you think the IRS treated you
12 feelings about the IRS and the income tax laws, I would be
12 fairly?
13 lying to you.
13
14
14 the change each year, you know, there are certain changes,
Now, this is an income tax evasion case, and if
Now, has anybody on the panel had any problems
PROSPECTIVE JUROR: Well, after they, you know,
PROSPECTIVE JUROR: I suppose so. You know,
15 with the IRS? Have you had any audits or anything like
15 so forth, but certain things, you know, were deductible,
16 that?
16 you couldn't deduct it, so it's kind of hard to say, you
17
PROSPECTIVE JUROR: I was audited a number of
17 know, because of the changes, you know, they steady
18 years ago.
18 changing what you could deduct.
19
19
MR. MURPHY: All right. As a result of that,
MR. MURPHY: Okay. Can you -- if -- if you end
20 do you have any negative feelings about the IRS?
20 up on the jury in this case, can you put that as -- any
21
21 feelings you might have as a result of that audit to the
22
MR. MURPHY: Okay. But you think you were
22 side and decide the case based on the facts and the law
23 treated fairly throughout the audit process?
23 that the judge gives you?
24
24
PROSPECTIVE JUROR: I'll do my best.
25
MR. MURPHY: Okay. Anybody else? Yes, sir.
25
MR. MURPHY: Okay. But do you think you could?
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59
Can you take an oath and swear that you can do it?
today?
2
PROSPECTIVE JUROR: I believe so.
2
THE JURY: No.
3
MR. MURPHY: Okay. Now, that brings us to an
3
PROSPECTIVE JUROR: She looks familiar. Are
4 important point. Judge McCalla in this case will instruct
4 you perhaps a real estate agent?
5 you, ladies and gentlemen, if you end up on the jury what
5
THE COURT: I'm sorry, I couldn't hear you.
6 the law is and what law you have to apply, and he'll
6
PROSPECTIVE JUROR: She looks familiar. I just
7 define what the crime of income tax evasion is, that sort
7 asked if she was a real estate agent.
8 of thing. Now, does -- and he'll instruct you that you
8
THE COURT: Not a real estate agent.
9 have to apply his law whether you like it or not. Now,
9
MR. BECRAFT: No, Your Honor, probably Mr.
10 does anybody have a problem with that? Do you think you
10 Murphy is probably going to ask, but I think it is an
11 can apply the law whether you agree with it or not? Does
11 important question to ask, she does work. She is a FedEx
12 anybody have a problem with that? I know it is Monday
12 pilot, Your Honor.
13 morning, nobody is talking. Not getting much of a
13
14 response, but I'm going to take it to mean that nobody has
14 estate agent part out, doesn't it?
15 a problem with that if you aren't raising your hands.
15
16
16 operations at the airport, so perhaps --
Okay. Let me say a word about what we're
THE COURT: Okay. I think that takes real
PROSPECTIVE JUROR: I'm the director of
17 doing. In voir dire, I only know this because the judge
17
THE COURT: Do you recognize --
18 told me this, it is old French for speak the truth, and
18
PROSPECTIVE JUROR: I may have recognized the
19 what we're trying to do here -- we're not trying to get a
19 face, but I don't know the lady individually.
20 government jury or a defense jury, we're trying to get a
20
21 fair jury. We're trying to get a jury that has no
21 of more questions about that.
22 preconceived notions that are going to affect the way they
22
23 control the case, and that's why we're asking the
23 operations director at the airport, and the proof may
24 questions we do. Do any of you ladies and gentlemen know
24 establish that the defendant, Ms. Kuglin, is a FedEx
25 any of the parties that are seated here before you here
25 employee, is that going to cause you any problems, are you
THE COURT: I will let Mr. Murphy ask a couple
MR. MURPHY: Now, the fact that you are
62
61
going to be worried about FedEx being mad at you no matter
that it's not proof of guilt? Does everybody understand
2 how you decide the case?
2 that?
3
3
4
MR. MURPHY: Now, Ms. Vasser, do you also work
4
MR. MURPHY: Does everybody understand that Ms.
5 for FedEx?
5 Kuglin, as she sits before you today, is presumed to be
6
PROSPECTIVE JUROR: I do.
6 innocent, do you understand that?
7
MR. MURPHY: Okay. Is it going to cause you a
7
8 problem if there's another FedEx employee here?
8
MR. MURPHY: Okay. And do you also understand
9
9 that the government has the obligation of coming forward
10
MR. MURPHY: It's not -- it's not going to
10 and proving Ms. Kuglin guilty as charged in the indictment
11 influence the way you decide the case?
11 beyond a reasonable doubt, does everybody understand that?
12
12
13
MR. MURPHY: Okay. Because you understand
13
MR. MURPHY: Does anybody think that the
14 you're going to have to decide the case on the facts --
14 government should be held to a lesser standard of proof?
15
15
THE JURY: No.
16
MR. MURPHY: -- that you hear from the witness
16
MR. MURPHY: By the same token, does anybody
17 stand and the law that the judge gives you?
17 think that the government ought to be held to a higher
18
18 standard of proof? Do you think we ought to have to prove
19
MR. MURPHY: Okay. Thank you. Now, do any of
19 it beyond any doubt? You think we should have to prove it
20 you ladies and gentlemen know anything about this case?
20 beyond any doubt?
21 Has anybody talked the case over with you? Have you heard
21
PROSPECTIVE JUROR: Beyond a shadow of a doubt.
22 anything about it from any friends at church, anything
22
MR. MURPHY: Now, the judge is going to
23 like that?
23 instruct you that the burden of proof in the case is
24
24 beyond a reasonable doubt, which is not beyond a shadow of
Now, does everybody understand that the
25 indictment is just a way to bring this proceeding about,
25 a doubt; is that going to be a problem?
64
63
THE COURT: One reason for that is there can
2 always be an unreasonable doubt. I mean is Elvis dead? I
2
MR. MURPHY: Can everybody give a fair trial to
3 mean who thinks Elvis is not dead? Elvis is alive. But
3 both sides? Can everybody be fair to the defendant? Can
4 there are people who will believe that Elvis is -- and I
4 everybody be fair to the government?
5 will tell you, my wife was a resident, Elvis is dead,
5
THE JURY: Yes.
6 folks, I hate to tell you, you know, he's dead. There are
6
MR. MURPHY: As usual, ladies and gentlemen,
7 things that people have unreasonable doubts about. We
7 I'm having trouble reading my own writing.
8 might wish that it wasn't the way it is in the case of
8
9 somebody like Mr. Presley, but it's not a reasonable
9 family or friends that are involved in law enforcement,
10 doubt. It's not based on reason and common sense. It's
10 work for the Sheriff's Department or federal agents, work
11 really based upon emotion, usually. So beyond a shadow of
11 for the police department? Yes, sir.
12 a doubt is not the standard. You know, that's -- you
12
13 know, can I prove to you -- I can probably prove to you
13 police officer.
14 beyond a shadow of a doubt that Elvis is dead because
14
15 there's some physical evidence of his not being alive, but
15 airport?
16 for some things we can never prove it beyond all doubt,
16
17 it's just not possible.
17
MR. MURPHY: Are you a member of the Airport
18
I'm sorry, go ahead, Mr. Murphy.
18 Authority?
19
MR. MURPHY: Thank you, Judge.
19
PROSPECTIVE JUROR: Yes, I am.
20
But do you understand what the judge is
20
MR. MURPHY: Police department?
21 saying --
21
PROSPECTIVE JUROR: Yes. I'm the director of
22
22 operations in public safety, which I have responsibility
23
MR. MURPHY: -- beyond a reasonable doubt is
23 for the police department.
Do any of you, ladies and gentlemen, have any
PROSPECTIVE JUROR: As part of my job, I'm a
MR. MURPHY: You're a police officer at the
24 the standard that you're going to have to decide the case
24
MR. MURPHY: So you operate like the police
25 on, okay?
25 chief out there?
66
65
MR. MURPHY: And what does he do at the IRS?
PROSPECTIVE JUROR: The police chief reports to
2 me, yes.
2
3
3 tax -- with the tax, you know, examiner, I believe that's
MR. MURPHY: Anybody else? Any family members,
PROSPECTIVE JUROR: He work, you know, with
4 friends? Does anybody have any family members or friends
4 the title.
5 that work for the IRS?
5
6
Okay. Nobody will fess up to it, okay.
6 taxes?
7
Yes, sir.
7
PROSPECTIVE JUROR: If I'm not mistaken, yes.
8
PROSPECTIVE JUROR: I have a son that works for
8
MR. MURPHY: Now, the fact that your son works
MR. MURPHY: So he examines people's income
9 the IRS.
9 for the IRS, is that going to cause you any problems? Is
10
MR. MURPHY: You have a son that works --
10 it going to make it harder for you to be fair to the
11
THE COURT: We're going to pass the mic back.
11 defendant?
12 One reason we pass the mic is that it goes through our
12
13 system here, and actually you folks back there can hear it
13
MR. MURPHY: Is it going to make it harder for
14 when we're speaking in the mic, can't you? And when we
14 you to be fair to the government?
15 don't speak into the mic, you can't hear. And they need
15
PROSPECTIVE JUROR: Loaded question.
16 to be able to hear our answers, so just be sure that you
16
MR. MURPHY: I believe this gentleman down
17 speak into that mic.
17 here, yes, sir.
18
Have you got --
18
19
MR. MURPHY: Well, it wasn't working.
19 ago that were criminal investigators with the IRS.
20
THE COURT: Well, you just keep your voice up,
20
PROSPECTIVE JUROR: I had friends some years
MR. MURPHY: Is that going to cause you a
21 and you usually can be heard. If you can't hear Mr.
21 problem?
22 Murphy, let me know too.
22
PROSPECTIVE JUROR: No, it's not.
23
MR. MURPHY: That's what my kids say anyway.
23
MR. MURPHY: If you were to vote not guilty in
24
PROSPECTIVE JUROR: Well, I have a son that
24 this case, would that embarrass you with those friends?
25 works for the IRS.
25
PROSPECTIVE JUROR: I haven't even seen them in
68
67
MR. MURPHY: Okay. Thank you, ma'am.
the last 15 years, they have moved away.
2
MR. MURPHY: Okay. Thank you.
2
Have any of you, ladies and gentlemen, ever
3
Is any -- are any of you, ladies and gentlemen,
3 served on a jury in a civil case? If you have, raise your
4 employed by the federal government?
4 hands.
5
Yes, ma'am.
5
6
COURT SECURITY OFFICER: Pass the mic down.
6 that there's six separate counts in this indictment? This
7
PROSPECTIVE JUROR: I work for USDA, the U. S.
7 indictment charges six distinct crimes and that you're
Okay. Ladies and gentlemen, do you understand
8 Department of Agriculture.
8 going to be required to render a verdict as to each count
9
MR. MURPHY: How long?
9 of the indictment. Does anybody have a problem with that?
10
PROSPECTIVE JUROR: For 26 years.
10 Okay. And as the judge said, the number of charges
11
MR. MURPHY: What part of USDA?
11 doesn't make a person guilty, everybody understands that?
12
PROSPECTIVE JUROR: Cotton, cotton program.
12
13
MR. MURPHY: Okay. Do you work at the classing
13 panel, do you have a belief that you shouldn't be required
Okay. Does anybody on the jury -- on the jury
14 office?
14 to pay taxes? That's different than you don't like paying
15
PROSPECTIVE JUROR: Yes, uh-huh.
15 them, don't enjoy it. Do you think that tax laws are
16
MR. MURPHY: The fact that the federal
16 unconstitutional or improper, or does anybody have
17 government is bringing this case, is that going to cause
17 feelings like that? Okay. Does anybody have a problem
18 you any problems?
18 with the fact that some violations of the tax laws may be
19
19 criminal violations? You know, it's kind of like in drug
20
MR. MURPHY: Are you going to feel like you
20 cases, you have some jurors sometimes that think marijuana
21 have to vote guilty?
21 ought to be legalized and don't approve of prosecutions of
22
22 marijuana distributors, anybody feel like that, that the
23
MR. MURPHY: And you can be fair to the
23 tax laws -- that criminal charges shouldn't be brought for
24 defendant?
24 tax violations? Nobody is saying anything.
25
25
Yes, sir.
70
69
PROSPECTIVE JUROR: I have a feeling that our
hold that against her?
2 tax laws are set up more for the rich folks instead of the
2
3 poor folks, being one of the poorer ones.
3
MR. MURPHY: Okay. Thank you, sir.
4
4
Have any of you, ladies and gentlemen, ever
MR. MURPHY: Okay. Now, you understand that
5 the judge is going to instruct you what the law is in the
5 worked as income tax preparers or have accounting degrees,
6 case, and you will have to follow that law without
6 anything like that? I know, ma'am, you said you worked at
7 consideration of that feeling; do you understand that?
7 a CPA office?
8
8
9
THE COURT: Okay. Now, does that cause you a
9 I worked for 18 years of just preparing tax returns. I
PROSPECTIVE JUROR: My ex-husband was a CPA and
10 problem?
10 didn't do the actual -- the CPAs in the firm did the
11
11 interaction with the IRS, but I did prepare tax returns.
PROSPECTIVE JUROR: Because that has nothing to
12 do with a defendant, because that is our law per se.
12 I don't do that now, but I did.
13
13
MR. MURPHY: There you go. Would you speak
MR. MURPHY: Okay. Do you have any bad
14 into the microphone, sir?
14 feelings about the IRS based on your experience working
15
15 with the CPA firm?
PROSPECTIVE JUROR: I said that has nothing to
16 do with a defendant, that's just the way our system works.
16
PROSPECTIVE JUROR: No, if anything, it helped
17
MR. MURPHY: Okay.
17 me feel better. I learned that you didn't have to fear
18
PROSPECTIVE JUROR: We don't have a perfect
18 it, the people -- that the IRS does their information on
19 system, I think anybody would agree with that.
19 the information that they have, and the tax accountants'
20
MR. MURPHY: Okay. But you're not going to
20 role is to help them, if they have information the IRS
21 have any problem applying the law that the judge gives
21 does not have, and so it didn't leave negative feelings
22 you?
22 about the IRS.
23
23
MR. MURPHY: You understand that if you're
24
THE COURT: If there's proof in the case that
24 selected on the jury, you're going to have to decide the
25 this defendant made a high salary, you're not going to
25 case based on the facts that are admitted into evidence
72
71
and the law as the judge gives it to you?
in the King trial, all 30 days with Dr. William Peppers.
2
2
3
MR. MURPHY: Do you understand that?
3 Peppers in the presentation of that case or were you just
4
4 there?
5
THE COURT: And do you understand you can't go
5
MR. MURPHY: Okay. Were you helping Dr.
PROSPECTIVE JUROR: No, I served as security
6 back, and if you're selected as a juror, you say, well,
6 for the King family.
7 now, wait a second, when I was with the CPA firm, they did
7
8 it this way?
8 it says you work for one of the local funeral homes?
9
9
10 understand that. And this is so much back in the past --
10
MR. MURPHY: Okay. Are you a security officer?
11 in fact, I had just about even forgot this, that I should
11
PROSPECTIVE JUROR: No, I'm a family counselor,
12 bring this up. I am a pastor of a church now, so my world
12 family service counselor, and sometimes a funeral
13 doesn't evolve around the -- this world now.
13 director.
14
14
PROSPECTIVE JUROR: Well, yes, sir, I
MR. MURPHY: Okay. Mr. Salaam, have you ever
MR. MURPHY: Okay. I believe on the jury sheet
MR. MURPHY: Okay. How long have you worked at
15 done any taxes or anything like that? They're going to
15 Memphis Funeral Home?
16 pass you the mic.
16
PROSPECTIVE JUROR: Forest Hill.
17
PROSPECTIVE JUROR: No, I haven't.
17
MR. MURPHY: Forest Hill, I'm sorry.
18
MR. MURPHY: Because you talked about it being
18
PROSPECTIVE JUROR: That's the other guy.
19 a 7201 charge.
19
MR. MURPHY: That's the competition. Forest
20
20 Hill.
PROSPECTIVE JUROR: I've studied prelaw at St.
21 Louis University some, and I've attended a lot of trials,
21
PROSPECTIVE JUROR: About a year and a half.
22 but never did anything with taxes but pay them.
22
MR. MURPHY: Okay.
23
23
PROSPECTIVE JUROR: I have a family business
MR. MURPHY: What kind of trials did you
24 attend?
24 too.
25
25
PROSPECTIVE JUROR: All type. I participated
MR. MURPHY: Okay. Now, what you learned in
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73
school and the prelaw courses and what you learned by
things, so you have got about 10 minutes.
2 sitting in this these trials, you understand that's not
2
3 something that you can use in this case because the judge
3 wave your hand and cut me off any place.
4 will instruct you on the law, and the facts may be
4
PROSPECTIVE JUROR: I will just speak up.
5 different, all that sort of thing?
5
MR. BECRAFT: Ladies and gentlemen, my name is
6
6 Larry Becraft, and I'm here to represent Vernie Kuglin,
PROSPECTIVE JUROR: Yes, I understand it. I'm
MR. BECRAFT: I will just tell you that you can
7 glad you understand it too.
7 who is the defendant in this case. And, of course, the
8
8 other fellow over here is Bob Bernhoft, and my question to
MR. MURPHY: Okay. I don't know. Sometimes I
9 don't understand it. It's just engrained in us, in
9 you is, first and foremost, has anybody ever met Vernie
10 lawyers, things have got to be just so-so.
10 Kuglin, heard about her or heard about her lawyers? How
11
PROSPECTIVE JUROR: All right.
11 about -- you know, some people -- the U. S. Attorney's
12
MR. MURPHY: Okay. I'm down to my last
12 office is one floor below, a lot of people work down
13 question, ladies and gentlemen. And lawyers are kind of
13 there, do any of you know or are you socially acquainted
14 like Baptist ministers, finally does not necessarily mean
14 with anybody that works in the U. S. Attorney's office?
15 immediately. Is there anything about this case or
15 Whether it is an attorney -- yes, Mr. White.
16 anything that y'all think the lawyers and the judge ought
16
17 to know that hasn't come up? Anything we haven't asked
17
MR. BECRAFT: You know someone? And who would
18 that you think that we should have?
18 that be?
19
19
PROSPECTIVE JUROR: Terry Harris.
20 and gentlemen. Thank you.
20
MR. BECRAFT: Okay. The U. S. Attorney?
21
21
22 we're ready, we're fine, we will go until about 25, 27
22
MR. BECRAFT: Are you socially acquainted with
23 after, and then we will take our lunch break, and I will
23 him?
24 have to give you -- I will have to have a couple of
24
25 minutes to tell them the rules about those sorts of
25 professionally.
Okay. Well, with that, I will sit down, ladies
THE COURT: We're going to go until -- no,
PROSPECTIVE JUROR: Not socially,
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75
MR. BECRAFT: So out at the airport, the
somebody that works for the government rather than giving
2 U. S. Attorney's office has some dealings with the
2 the same type of credence you would for any other witness?
3 security out there, and that's the way you've met him and
3
4 worked with him, correct?
4 of you, is there anybody here who does not live in Shelby
5
5 County? And you, Mr. White?
6
MR. BECRAFT: Okay. Is there anything about
6
PROSPECTIVE JUROR: Vedder.
7 that relationship that would maybe cause you to be
7
MR. BECRAFT: Vedder, I'm sorry. How far away
8 favorable to the government and simply because you know
8 do you live from the courthouse?
9 the man that runs the office?
9
PROSPECTIVE JUROR: Tipton County.
10
10
MR. BECRAFT: And you live where?
11
MR. BECRAFT: So you can cast that aside if
11
PROSPECTIVE JUROR: Lauderdale County.
12 you're picked as a juror?
12
MR. BECRAFT: And how long does it take y'all
13
13 to get to court?
14
MR. BECRAFT: Is there anyone else that knows,
14
I take it most of you are -- or, in fact, all
PROSPECTIVE JUROR: It takes me an hour and a
15 you know, either the lawyers or the investigators or
15 half.
16 anybody else that might work in that office?
16
MR. BECRAFT: An hour and a half?
17
17
THE COURT: Where do you live in Lauderdale
Now, we're going to have in this case -- you
18 know, we're going to bring in some people from the IRS,
18 County?
19 some people from the Service Center, it is going to be IRS
19
PROSPECTIVE JUROR: Halls, Tennessee.
20 people that are going to take the witness stand, and my
20
THE COURT: Halls, okay. And I'm sorry, where
21 question to you at this time is this: You know, are you
21 do you live in Tipton County?
22 going to be giving to anybody that is a government
22
23 employee greater credence to their testimony just because
23 minutes.
24 they work for the government? Anybody that is going to be
24
25 leaning in the direction of giving greater credence to
25 Tipton County?
PROSPECTIVE JUROR: It took me about 45
THE COURT: And you live in which part of
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77
PROSPECTIVE JUROR: Drummonds.
2
THE COURT: I live in Rosemark, which is one
start at 9:00 or 9:30 in the morning?
2
Mr. Murphy asked some questions along these
3 mile south of the line --
3 lines, but I want to kind of repeat it because I may not
4
4 have been hearing what his question was closely. My
5
THE COURT: I used to work in Covington.
5 question relates to either you, yourself, or members of
6
PROSPECTIVE JUROR: Drummonds.
6 your immediate family or some of your close friends that
7
THE COURT: Drummonds, okay, yeah, yeah. Just
7 you meet on a regular basis, you know, you hold -- they're
8 to get an idea. It may not be quite as familiar. I think
8 part of your family almost. Out of that group, are there
9 those are distances -- I know anybody from Tipton County,
9 any of you or members of your families or those close
10 we always end up asking them to drive back and forth.
10 friends that have ever at any time worked for either state
11 People from further away, if it takes a long time, we'll
11 or federal law enforcement? All right. How about anybody
12 actually enter an order and let you stay in a hotel, if we
12 that has either themselves or members of their family or
13 can get a hotel room in the downtown area if it becomes a
13 close friends that have ever worked for either state or
14 problem. A lot of people prefer to commute. Anybody from
14 federal government, and I'm including everything, you
15 as far north as Dyersburg, I usually suggest that they
15 know, like if it was any agency of the federal government,
16 stay overnight, just so far -- that's just such a long
16 any agency of the state government, does anybody
17 drive. I need to let you know that, and you wouldn't
17 themselves or members of their family or close friends
18 necessarily know that was the policy on trips. Go right
18 work for government in any way, shape, manner or form
19 ahead.
19 other than the ones that -- yes, ma'am.
20
PROSPECTIVE JUROR: My brother is a lieutenant.
21 else? If you're picked as a juror, are you going to have
21
COURT SECURITY OFFICER: Pass the mic.
22 a problem getting here to court? Somebody might park over
22
PROSPECTIVE JUROR: He works for the Sheriff's
23 there at Mud Island or some other place. Does anybody
23 Department.
24 think if you're picked as a juror you're going to have a
24
MR. BECRAFT: Sheriff's Department?
25 difficult time at least getting to court here whether we
25
20
MR. BECRAFT: Thank you, Your Honor. Anybody
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79
PROSPECTIVE JUROR: I didn't. Although --
MR. BECRAFT: Your brother?
2
2
MR. BECRAFT: We know you work for the Airport
3
MR. BECRAFT: Okay. Shelby County?
3 Authority.
4
4
5
MR. BECRAFT: All right. And how long has he
5 several close friends that are FBI agents.
PROSPECTIVE JUROR: Right. I actually have
6 been employed?
6
MR. BECRAFT: Okay. Thank you.
7
PROSPECTIVE JUROR: About 13 years.
7
Mr. Spurlin?
8
MR. BECRAFT: Okay. Do you see him on a
8
PROSPECTIVE JUROR: Used to work for the FAA.
9 regular basis?
9
MR. BECRAFT: And how long ago was that?
10
10
PROSPECTIVE JUROR: '81.
11
MR. BECRAFT: All right. So chances are if you
11
MR. BECRAFT: And how long did you work for the
12 were picked as a juror in this case there might be a
12 FAA?
13 possibility that you would see him sometime during the
13
PROSPECTIVE JUROR: Eleven years.
14 course of the trial?
14
MR. BECRAFT: And you're working now, you left
15
PROSPECTIVE JUROR: Possible.
15 probably about '92 '93, the FAA?
16
MR. BECRAFT: Okay. Well, you wouldn't let
16
PROSPECTIVE JUROR: No, I left in '81.
17 your -- if you were picked as a juror, would you let your
17
MR. BECRAFT: And for the last 20 years, you
18 brother, this Shelby County deputy influence you or your
18 have been working -- we had a little note that you work in
19 decision in this case in any way, shape, manner or form?
19 auto sales, is that correct?
20
20
PROSPECTIVE JUROR: Right, auto parts.
21 know about the case I was on.
21
MR. BECRAFT: And have you been doing that
22
MR. BECRAFT: Okay. Thank you. Mr. White?
22 since you left the FAA?
23
PROSPECTIVE JUROR: Sir?
23
24
MR. BECRAFT: What? Did you raise your hand?
24 year.
PROSPECTIVE JUROR: No, because he wouldn't
25 I thought you did.
25
PROSPECTIVE JUROR: Basically, except for one
MR. BECRAFT: Do you have any friends or
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81
PROSPECTIVE JUROR: I would say roughly 10, 11
relatives that still work for the FAA that you still talk
2 years ago, 12 years ago maybe.
2 to?
3
3
MR. BECRAFT: And that was a criminal case?
4
MR. BECRAFT: Okay. All right. Thank you.
4
PROSPECTIVE JUROR: Well, it involved DUI.
5 Anybody else that raised their hand to that question about
5
MR. BECRAFT: Okay. And would there be
6 either being employed by or having friends that are
6 anything about your service in that prior criminal case
7 employed by some government agency? Have any of you
7 that would have any effect upon what you do or think or
8 ever -- Mr. Murphy asked the question about whether or not
8 decide if you're picked as a juror in this case?
9 you had served in a civil jury. I don't know -- if y'all
9
10 came in maybe last week for jury service, but let me ask
10
MR. BECRAFT: Okay. All right. And, Mr.
11 this specific question: Have any of you ever sat on a
11 Smith, did you raise your hand?
12 grand jury, either state or federal? You know, a grand
12
13 jury is a group of people that assembles in a building
13
MR. BECRAFT: And you have been a juror in a
14 much like this, either in the -- some courthouse, state or
14 criminal case before?
15 federal, and they have government agencies and other
15
PROSPECTIVE JUROR: Yes, sir, that's correct.
16 witnesses come before them to tell them about the
16
MR. BECRAFT: And how long would that be?
17 commission of crimes, and a grand jury returns an
17
PROSPECTIVE JUROR: I would say roughly about
18 indictment. Now, has anybody ever sat on a grand jury
18 five years ago.
19 before, state or federal? Okay. How about -- I think
19
MR. BECRAFT: And was that state or federal?
20 your answers to Mr. Murphy's questions about civil juries,
20
PROSPECTIVE JUROR: I think it was state.
21 I don't think there was anybody here who sat on a civil
21
MR. BECRAFT: Okay. Here in Shelby County?
22 jury. How about a criminal jury? Okay.
22
23
PROSPECTIVE JUROR: Shelby County.
23
MR. BECRAFT: Would there be anything about
24
MR. BECRAFT: Shelby County. How long ago was
24 your service as a juror in a criminal case that -- you
25 that?
25 know, you sat through one criminal trial in the past and
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83
PROSPECTIVE JUROR: It will be a year in
you may be picked to sit in another criminal jury this
2 time here, is there anything about your prior experience
2 September.
3 that might have some influence or effect upon how you
3
4 listen to the evidence or react in this case if you're
4 that experience that might have an effect upon -- now,
5 picked as a juror?
5 you're not sitting up there in what we call the hot seat,
6
6 you will be sitting as a juror in this case, is there
7
MR. BECRAFT: All right. So you can leave that
7 anything that would maybe affect what you do in this case
MR. BECRAFT: Okay. Was there anything about
8 totally behind you, whatever you did then, and consider
8 having been a prior witness?
9 this case based solely on the facts and the testimony and
9
10 the documents that are offered in evidence?
10 person a little better after having sat there.
11
PROSPECTIVE JUROR: Absolutely.
11
12
MR. BECRAFT: Was there anybody else who raised
12 responded to being a witness? Let me take Mr. Spurlin.
13 their hand to the question about criminal jury service?
13
14
14 years.
How about -- we're going to be bringing in some
PROSPECTIVE JUROR: Maybe be able to hear that
MR. BECRAFT: All right. Anybody else that
PROSPECTIVE JUROR: It's probably been 30
15 people to testify in this case. Is there anybody who has
15
MR. BECRAFT: As a witness in a case?
16 ever been a witness either in a civil or a criminal case
16
17 meaning, you know, you had to come up here and sit down in
17
MR. BECRAFT: Well, there's no -- that's not
18 a chair? Ms. Vickers.
18 going to affect what you do here, right?
19
19
20 custody case for my daughter.
20
MR. BECRAFT: Mr. Salaam, I think you raised
21
21 your hand?
PROSPECTIVE JUROR: In a custody case, child
MR. BECRAFT: Okay. All right. So you had to
22 go to -- was that here in Shelby County?
22
23
23 character witness for one of my co-workers.
PROSPECTIVE JUROR: No, it was in north
PROSPECTIVE JUROR: Yes, in 1979, I was a
24 Alabama.
24
25
25 case, criminal case?
MR. BECRAFT: How long ago was that?
MR. BECRAFT: All right. Was that in a civil
85
PROSPECTIVE JUROR: Civil case.
2
THE COURT: And sometime ago, what you did then
86
you start the mental process of making up your mind, and
2 we cannot do it once you start it. So I'm going to ask
3 wouldn't have any effect upon your role as a juror in this
3 you not to verbalize anything about the case. The second
4 case if you're picked, right?
4 thing is not only are you not to talk among yourselves
5
5 about the case, but obviously you're not to talk with
6
MR. BECRAFT: Was there anybody else? And you
6 anybody else. If you need to call an employer or family
7 are Mr. Stovall?
7 member or somebody and tell them what you're doing, you
8
8 can call and tell them that you're a prospective juror in
PROSPECTIVE JUROR: Yes. Probably about 20
9 years ago, I was a witness for an employee of mine, he was
9 a criminal case in federal court and you cannot tell them
10 up on drug charges.
10 anything, because naturally people ask. So tell them that
11
MR. BECRAFT: All right.
11 you're -- that's all you can tell them is that you're a
12
THE COURT: We're going to need to take our
12 potential juror in a criminal case in federal court. You
13 lunch break.
13 can tell them more about it when the case is over or when
14
MR. BECRAFT: Sure, Your Honor.
14 you're released. The third thing is that if anybody
15
THE COURT: I need to tell everybody seven
15 should try to talk you about the case, it's improper, and
16 things before we take that break. We will get the jury
16 so do not -- if they do, tell them they shouldn't, but,
17 today, I'm sure. In fact, it may not be that far into the
17 secondly, report that to one of our court security
18 afternoon. But any time we take a break, there's seven
18 officers. They're the ladies and gentlemen who have on
19 things to keep in mind. The first thing is you cannot
19 the blue jackets and the badges, and they will let me
20 discuss the case among yourselves. It's very tempting,
20 know, or a member of my staff or me. The fourth thing is
21 because that's the one thing you all have in common is
21 don't speak to the lawyers or the parties, you can't --
22 that you're juror on a -- or potentially a juror on a
22 you should give them space. If you see them get on an
23 case. You cannot discuss the case. Don't talk about the
23 elevator, let them take an elevator, you take the next
24 lawyers, the parties, anything about the proceedings at
24 one, because if they were seen speaking to you or
25 all. When you start talking about any aspect of the case,
25 appearing to be close to you engaged in conversation, it
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87
might appear that they were attempting to influence you.
discussed the evidence with each other, four days from now
2 They will avoid that, but they need your help in that
2 after you have heard all the proof and the final arguments
3 regard. So don't speak to them at all. The fifth thing
3 and final instructions, then make up your mind. So wait,
4 is do not do any research or make any investigation. I
4 continue to be patient and wait.
5 know that some people may know something about the law in
5
6 the area. Don't go to the library and look anything up or
6 come back at 2:00 o'clock, and we'll see you at 2:00
7 make any type of inquiry. It's our job to -- the lawyers'
7 o'clock, we'll resume jury selection at that time. All of
8 job to present the evidence through the witnesses and the
8 you, we will ask you to be back at that time. Thank you.
9 facts, and then it's my job to give you the law. So don't
9
(Recess taken at 12:30 until 2:00 p.m.)
10 try to make any investigation in that regard. The sixth
10
(Jury in.)
11 thing is, of course, avoid anything in the newspaper or on
11
THE COURT: All right. I think we have got
12 television or radio that might be about this case or cases
12 everybody. Yes, sir. You may proceed.
13 like this. You simply -- that would be outside the --
13
14 that would be material presented outside the presence of
14 and gentlemen, right before our lunch break, I wrote the
15 the court and the parties, so you cannot consider that.
15 last question that I had asked of y'all about being a
16 If inadvertently you see something in the newspaper or
16 witness, and I think my recollection is that everybody
17 hear something, then tell me about it, and it probably
17 that had replied to the question had given me some
18 won't be a problem, but you need to tell me so we can
18 information about that. Did I miss anybody?
19 check and see if it is. And the seventh thing is keep an
19
20 open mind. Obviously, one of the first things that you
20 Kuglin is charged with six counts of tax evasion, bad
21 told me about until you have heard all the evidence in the
21 word, but I expect that what she is going to do in this
22 case, the final arguments of counsel and the final
22 case is she is going to take the stand, tell you the
23 instructions on the law and have gone to the jury room and
23 reasons why, and her testimony will involve something
24 then discussed the evidence among yourselves, which will
24 about tax law. And Judge McCalla was asking some
25 be probably four days from now, and then after you have
25 questions earlier today about how many people have some
Ladies and gentlemen, we're going to ask you to
MR. BECRAFT: May it please the court, ladies
As you know by now, this is a tax case. Ms.
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89
MR. BECRAFT: Anybody else fall in that
information or knowledge or have ever studied the tax laws
2 in any way, shape, manner or form. For example, have you
2 category that has done some type of personal study of the
3 taken a course involving tax or have you ever picked up a
3 tax law?
4 tax code or other information and actually studied that?
4
5 What I would like to know from any of you right now is if
5 people have seen on TV -- you know, we have Perry Mason,
6 you have ever engaged in any type of the study of the tax
6 and we have all of these other shows about civil and
7 laws like I have just described? Yes, ma'am. And that
7 criminal cases, and I think probably all of you're aware
8 would arise because you worked in the past for the CPAs.
8 of the burden of proof that's involved in a criminal case.
9 And did that involve getting down to the details of the
9 In a civil case, all you have to do is kind of tip the
10 Internal Revenue Code?
10 scales of justice over to one side. The party that proves
11
11 by a preponderance of the evidence their case is entitled
PROSPECTIVE JUROR: It involved sometimes
This is a criminal case and, you know, a lot of
12 looking up what the code was in preparing a tax return.
12 to win. However, in a criminal case, the burden of proof
13
13 is, you know, what we do here in America is we have a
MR. BECRAFT: Okay. Now, with that in mind, I
14 want to tell you something that's going to happen during
14 burden that is imposed upon the government, here it's
15 this case. Ms. Kuglin is going to give her beliefs about
15 represented by Mr. Murphy. They have got to submit proof
16 the law, but all the law that is applicable in this case
16 in this case to prove beyond a reasonable doubt that Ms.
17 will come from the court, you understand that, right?
17 Kuglin committed the crimes. Is there anybody here that
18
18 kind of disputes or has some difference of opinion about
19
MR. BECRAFT: And so if you have some
19 the burden of proof that the government might have to
20 preconception or some view of tax or some recollection,
20 carry in this case? Now, in this case, you know, I'm not
21 can you lay all of that aside if you're picked as a juror
21 going to tell you what the whole facts are, but, you know,
22 and just listen to what Judge McCalla tells you is the law
22 I can assure you that after the government ends their
23 that will be applicable in the case, can you do that?
23 proof, one of the first witnesses, we may have two, maybe
24
24 one, maybe three defense witnesses, but one of the defense
PROSPECTIVE JUROR: It has been done many years
25 ago, so it has been done.
25 witnesses is going to be Vernie Kuglin. She is going to
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91
get up and explain to you why she did what she did. Is
her each year, she lives in a condo at Waterford Place.
2 there anybody here that at this stage, without knowing the
2 They're in the process of building or buying an office or
3 substance of what she is going to testify about, is there
3 a building down at 1 Main Street South. So it's quite
4 anybody right here that says, well, gee, you know, I have
4 obvious that what is going to come out in this case, what
5 heard enough about this case that, you know, there is
5 you're going to be able to see about Vernie Kuglin is
6 nothing that she can say that would persuade me that she
6 someone that is, you know, makes good money and lives
7 is anything other than guilty? Is there anybody here that
7 nice, and there's going to be testimony in this case
8 is in that posture right now? Is everybody that on this
8 regarding her, you know, disputes with the IRS. Now, is
9 panel, in this jury box right here, are you going to tell
9 there anyone that knowing that much about the facts of
10 me that you will fairly listen to the testimony of Vernie
10 this case that you're thinking in your mind, well, I've
11 Kuglin, fairly weigh it and make a determination as to
11 got some type of preconceived notion or I'm -- you know,
12 whether she is not guilty or guilty, will each of you do
12 I'm somewhat uncertain about this blonde headed lady over
13 that?
13 here that is a FedEx pilot making a lot of money and
14
You know, you have already heard a little bit
14 living in a nice place in downtown Memphis, is there
15 about the facts of this case. She is an airline pilot.
15 anyone that right now has something inside of them that
16 She flies for FedEx, has been doing so for a number of
16 says, you know, there's something I don't like about
17 years. She lives down at the end of the street. She
17 Vernie Kuglin, is there any such feeling inside any of
18 lives in downtown Memphis. She has a condo down there.
18 you?
19 The proof is also going to show that their son, go down
19
20 far enough south on Main Street during lunch you will pass
20 in mind, treat her just like any other defendant? Could
21 by where her son lives, 1 Main Street. You know, just
21 you treat her just like -- what if the facts in this case
22 knowing the fact that she is a FedEx pilot, just knowing
22 were some 20 or 25 years ago when she was working for the
23 the facts that she makes -- you know, you heard Judge
23 welfare department, if she were a defendant and her job
24 McCalla read out those large figures that were in that
24 was what she had 25 years ago working for the welfare
25 indictment, 140, 150, $160,000 is what FedEx was paying
25 department, will you judge her equally under both sets of
Okay. Now, can each of you, with those facts
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93
facts? You won't have any problems or take into
know, have you got any reason, just show me your hand, I
2 consideration her station in life and hold that against
2 don't want to sit in this case? So each of you are
3 her when you decide this case? Will each of you -- you
3 willing --
4 know, this case is going to last, as you've heard, we're
4
5 probably going to try to wrap up, hopefully, Thursday
5 to do.
6 morning. After that's over with, what we're going to do
6
7 is the lawyers will get up and give closing arguments
7 right now to sit maybe through Friday afternoon and
8 after you have listened to all of these witnesses that
8 discharge your American civic duty?
9 will testify. The lawyers are going to kind of summarize
9
10 the case, but at the end of that, Judge McCalla is going
10 come up and just talk to me a second. Go right ahead.
11 to read to you a set of jury instructions. He's going to
11
MR. BECRAFT: Can I go ahead, sir?
12 tell you about what's important in this case, and what's
12
THE COURT: Absolutely. We have to fix a
13 important in this case will be what I call this criminal
13 couple of pieces.
14 state of mind that you must find in order to find her
14
15 guilty. If she doesn't have a criminal state of mind,
15 problem with the way that we settle criminal cases,
16 she's not guilty. Now, will each of you follow, listen
16 criminal disputes here in America? We bring in twelve
17 tentatively to what Judge McCalla has to say about what
17 tried and true members of our community and submit to them
18 the government must prove, listen to the law that she
18 for ultimate resolution the ultimate question of whether
19 gives to you and will each of you follow it? Any
19 or not someone is guilty or innocent of a crime?
20 reservations?
20
Nothing further, Your Honor.
21
21
THE COURT: We were just checking, we need to
Has anybody had problems hearing me? Anybody
THE COURT: I just raised my hand, I got plenty
MR. BECRAFT: So nobody -- everybody is willing
THE COURT: I'm going to let my technical guy
MR. BECRAFT: Does anybody here have any
22 have anything against me? Anybody have anything against
22 fix that lapel mic, it wasn't working, and Ike is going
23 Vernie Kuglin? Anything against Bob Bernhoft, the way he
23 to -- Mr. Mussleman is going to get that taken care of,
24 looks? Is there anybody here that for whatever reason,
24 and that was it.
25 maybe Judge McCalla might not like this, but I want to
25
Well, anything else from anybody else for the
96
95
panel at this time?
questions, sometimes I ask them, sometimes the lawyers ask
2
2 them. Really in this case, really nobody asked them. We
MR. MURPHY: Judge, I don't have anything else,
3 do have a small information sheet on each of you, but very
3 but -4
THE COURT: Let's talk about it at side bar,
4 small, so what we're going to do, just to make sure that
5 because I wanted to ask a couple of questions. There are
5 we know a little bit about each of you, is I'm going to
6 a couple of things that sometimes are covered and haven't
6 start with Ms. Vasser, I'm going to ask each of you set a
7 been covered yet, so I want to check.
7 questions. I'm going to ask what you part of the district
8
8 or city do you live in. As you can see, some people live
9 outside Shelby County, and also it is helpful for people
9 bench.)
10
THE COURT: Usually y'all or I ask a few
10 to know, for example, if you live downtown, if you live on
11 questions, do you want to ask those?
11 Harbor Town, if you live in Waterford Plaza, but just
12
12 generally what part of the district or city you live in.
MR. MURPHY: If you want me to do personal
13 stuff, that's fine.
13 Then I'll ask you what's your occupation, who's your
14
14 employer, are you married, and if you're married, I'm
THE COURT: I can run through them real
15 quickly, I'm going to go through them real fast, just
15 going to ask who your spouse is, so they will know and
16 their employer, I'm going to get whether they're married
16 so -- they will hear the name, and what does your spouse
17 or not, what does their spouse do. I'm going to ask them
17 do, just to make sure we have covered that with each
18 what part of the district they live in.
18 person, and then I'm going to ask you that final question,
19
19 is there any reason that you cannot serve on this jury and
20 be fair and impartial. Somebody usually asks those, and
20 court.)
21
THE COURT: I raised my hand because I used to
21 since they haven't been asked, I'm going to make sure we
22 tell people that anybody who really wanted to serve on a
22 have covered them. We also have you stand up when you do
23 jury probably shouldn't. That's sort -- that's an
23 that just so everybody can hear you okay. So if you will
24 important frame of mind to probably approach it. It is
24 stand please, what part of the city or district are you
25 real serious business. Usually we ask a couple of
25 from?
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97
PROSPECTIVE JUROR: One.
PROSPECTIVE JUROR: I'm Wolfchase area.
2
THE COURT: How old?
3 going to add one thing in there. And what is your -- I'm
3
PROSPECTIVE JUROR: Twelve.
4 going to ask your educational background. And I don't
4
THE COURT: Do you know of any reason that you
5 want to know very much, just how far you went in school.
5 could not serve on this jury and be fair and impartial?
6
PROSPECTIVE JUROR: College.
6
7
THE COURT: What is your occupation and who is
7
THE COURT: Thanks very much.
8 your employer? For some people, we know some of this, but
8
And Mr. White?
9 tell us that.
9
10
PROSPECTIVE JUROR: I'm a carrier for FedEx.
10
THE COURT: What is your title out there?
11
THE COURT: I think it's probably been obvious,
11
PROSPECTIVE JUROR: Director of operations and
2
THE COURT: Okay. I left out one thing, I'm
12 but everybody wants to be sure, a person who works at the
12 public safety.
13 airport or works at FedEx, do you know Ms. Kuglin?
13
14
14 sometimes?
15
THE COURT: Okay. Are you married?
15
16
16
THE COURT: Director White, what part of the
17
THE COURT: Your husband's name and his
17 district or city are you from?
THE COURT: So people call you Director White
18 occupation?
18
PROSPECTIVE JUROR: Collierville.
19
PROSPECTIVE JUROR: William Vasser.
19
THE COURT: And what is your educational
20
THE COURT: And what does he do?
20 background?
21
PROSPECTIVE JUROR: He's a team leader for
21
PROSPECTIVE JUROR: Master's degree.
22 FedEx.
22
THE COURT: Go ahead and tell us your
23
THE COURT: Okay. Any children?
23 occupation and who you work for.
24
24
25
THE COURT: How many children?
25 public safety. I work for the Memphis-Shelby County
PROSPECTIVE JUROR: The director of operations,
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99
THE COURT: Tell us what they do again, I think
Airport Authority.
2
THE COURT: And are you married?
2 I heard earlier, but --
3
3
4
THE COURT: Your wife's name and her
4 to parts stores and warehouses.
PROSPECTIVE JUROR: Well, parts store, we sell
5 occupation?
5
6
6
7 one, and she is an accountant.
7
THE COURT: And what is your wife's name and
8
8 her occupation?
PROSPECTIVE JUROR: Deborah White. Not that
THE COURT: And she is an accountant. Okay.
9 It would be bad to miss that one.
9
10
10 Methodist Hospital.
Do you know of any reason that you could not
PROSPECTIVE JUROR: Betty, and she works for
11 serve on this jury and be fair and impartial?
11
THE COURT: Okay. Do you know of any reason
12
PROSPECTIVE JUROR: No, I do not.
12 that you could not serve on this jury and be fair and
13
THE COURT: Thanks very much.
13 impartial?
14
Mr. Spurlin?
14
15
15
THE COURT: I should have asked you, do you
16
THE COURT: What part of the district or city
16 have children?
17 are you from?
17
18
PROSPECTIVE JUROR: Southeast Shelby County.
18
THE COURT: How many children?
19
THE COURT: Okay. And how much education do
19
PROSPECTIVE JUROR: Well, two of my own and one
20 you have?
20 stepson.
21
PROSPECTIVE JUROR: High school.
21
22
22 have children?
THE COURT: And I should ask, Mr. White, do you
23 your employer?
23
PROSPECTIVE JUROR: Yes, sir, two.
24
24
THE COURT: Two children, okay.
25
Hand that over to Mr. Salaam. How are you
PROSPECTIVE JUROR: Sales rep for Prime
25 Automotive.
102
101
doing this morning?
occupation and who is your employer?
2
PROSPECTIVE JUROR: Perfect.
2
3
3 and Cemeteries. I'm a family service counselor and also
PROSPECTIVE JUROR: Forest Hill Funeral Home
4 are you from?
4 funeral director.
5
PROSPECTIVE JUROR: Midtown.
5
THE COURT: Are you married?
6
THE COURT: What is your educational
6
7 background?
7
8
PROSPECTIVE JUROR: Doctorate.
9
THE COURT: Is that in -- what's that in?
9
PROSPECTIVE JUROR: Not at all.
10
PROSPECTIVE JUROR: Theology.
10
THE COURT: Thank you. Mr. Vedder, what part
11
THE COURT: Theology. You know, nobody asked
11 of the district or city are you from?
12 this question directly, and we nearly always ask this
12
PROSPECTIVE JUROR: Tipton County.
13 question also, and it really goes to everybody, is there
13
THE COURT: Okay. And actually you're from
14 any theological reason that you could not sit in judgment
14 sort of northwest of Tipton County?
15 in a case? And some people do feel that they cannot sit
15
PROSPECTIVE JUROR: Northwest.
16 in judgment. May as well ask the first one.
16
THE COURT: Toward the river?
17
PROSPECTIVE JUROR: No, not at all.
17
18
THE COURT: Generally speaking, most people who
18
19 have your background say that. There are a couple of
19 background?
20 denominations who do not want their members to sit on
20
PROSPECTIVE JUROR: One year of college.
21 juries.
21
THE COURT: And what is your occupation and who
22
22 is your employer?
23
THE COURT: Have you ever run into that?
23
24
24 warehouse for Cirtain Plywood, Incorporated.
25
THE COURT: Okay. Let's see, what is your
25
PROSPECTIVE JUROR: I'm general manager of a
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103
PROSPECTIVE JUROR: Well, I'm a golf pro, but
2
2 I'm a retired golf pro.
3 occupation?
3
THE COURT: Okay. Okay.
4
4
PROSPECTIVE JUROR: I got down in my back and
PROSPECTIVE JUROR: Wife's name is Karen, and
5 she's retired.
5 can't do much playing anymore.
6
THE COURT: Okay. Do you have children?
6
7
PROSPECTIVE JUROR: Got three daughters of my
7 I'm curious?
THE COURT: What was the best you ever shot,
8 own and one stepson.
8
PROSPECTIVE JUROR: Four under.
9
9
THE COURT: Four under?
10 reason that you could not serve on this jury and be fair
10
11 and impartial?
11
THE COURT: That's a lot better than most
12
PROSPECTIVE JUROR: None whatsoever, sir.
12 people.
13
THE COURT: Thank you.
13
Are you married?
14
And, Mr. Smith, is it Mr. Marlow Smith?
14
15
PROSPECTIVE JUROR: Marlow Smith.
15
THE COURT: What is he your wife's name and her
16
THE COURT: How are you doing today?
16 occupation?
17
PROSPECTIVE JUROR: Doing pretty good.
17
18
THE COURT: What is your -- what part of the
18 Walgreens.
THE COURT: All right. Do you know of any
PROSPECTIVE JUROR: Nell. She works for
19 district are you from?
19
THE COURT: Children?
20
PROSPECTIVE JUROR: I live in Whitehaven.
20
PROSPECTIVE JUROR: Got 14 kids, nine boys and
21
THE COURT: Okay. And what is your educational
21 five girls.
22 background?
22
THE COURT: That's true?
23
23
PROSPECTIVE JUROR: Yeah, 47 grandkids.
24
THE COURT: What's your occupation and who is
24
THE COURT: That's -- that may be a record.
25 your employer?
25 Congratulations.
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105
THE COURT: All right. Do you have any
PROSPECTIVE JUROR: I've run across some that
2 had more.
2 children?
3
3
PROSPECTIVE JUROR: I have three.
4 know of any reason that you could not serve on this jury
4
THE COURT: Okay. Do you know of any reason
5 and be fair and impartial?
5 that you could not serve on this jury and be fair and
6
6 impartial?
7
THE COURT: Thank you. Ms. Starnes, what part
7
THE COURT: That's wonderful. Well, do you
PROSPECTIVE JUROR: I can be fair and
8 impartial, and I did send in a reason with my
9
PROSPECTIVE JUROR: Raleigh area.
9 questionnaire, but they denied it.
10
THE COURT: What's your educational background?
10
11
11 necessarily see that many of those, so is it a real
12
12 problem --
THE COURT: Okay. You know, we don't
13 your employer?
13
PROSPECTIVE JUROR: It's relevant, yes, sir.
14
14
THE COURT: I'm going on -- in a minute, I'm
PROSPECTIVE JUROR: I'm a billing manager for
15 Raleigh Cordova Medical Group.
15 going to let you come up and tell me, just so we know it's
16
16 okay. We have a lot of people who asked to be excused,
17
PROSPECTIVE JUROR: Separated.
17 and then most people after they see the process think,
18
THE COURT: What does he do and what is his
18 well, it's okay, they can do it. I will talk to you in
19 just a couple of minutes.
19 name?
20
21 he's a mechanic for Gossett Mitsubishi.
21
THE COURT: Hand that back to Mr. Smith. Mr.
22
22 Smith, what part of the district or city are you from?
20
PROSPECTIVE JUROR: His name is Robert, and
THE COURT: Does that mean you get a good car
23 most of the time?
23
24
24 area.
PROSPECTIVE JUROR: That means I don't drive a
25 Mitsubishi.
25
PROSPECTIVE JUROR: Southeast, Orange Mound
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107
THE COURT: You know, you have -- near Halls,
background?
2
PROSPECTIVE JUROR: I have a master's.
2 one of the most famous map stores in the country.
3
THE COURT: Okay. And what is your occupation
3
PROSPECTIVE JUROR: Haven't been there, but I
4 and who is your employer?
4 have heard of it.
5
5
PROSPECTIVE JUROR: I'm a teacher at the Porter
THE COURT: It is amazing, they take orders
6 Leath Home for Children.
6 from all over the world. What is your educational
7
THE COURT: That's a very famous institution.
7 background?
8
PROSPECTIVE JUROR: Yes, it is.
8
PROSPECTIVE JUROR: Master of divinity.
9
9
10
PROSPECTIVE JUROR: No, divorced.
10 your employer?
11
11
12
PROSPECTIVE JUROR: Ten.
12 Cumberland Presbyterian Church, and they are my employer.
13
THE COURT: These are all your kids?
13
14
PROSPECTIVE JUROR: All these are my kids.
14
PROSPECTIVE JUROR: Divorced.
15
THE COURT: Well, this is -- we're having a
15
16 contest this time. Do you know of any reason that you
16
PROSPECTIVE JUROR: Three.
17
18
PROSPECTIVE JUROR: Your Honor, no, I don't.
19
THE COURT: Okay. Thanks very much.
19
20
Ms. Vickers -- or Reverend Vickers, actually.
20
THE COURT: Okay. Thank you.
21
21
Mr. Smith, Mr. Alphonso Smith, what part of the
22
22 city or district are you from?
PROSPECTIVE JUROR: I pastor the Poplar Grove
23 are you from?
23
PROSPECTIVE JUROR: I stay out in Raleigh.
24
24
PROSPECTIVE JUROR: From Halls, Tennessee,
25 which is Lauderdale County.
25 background?
110
109
PROSPECTIVE JUROR: Associate's degree.
2
your employer?
2
PROSPECTIVE JUROR: I'm a salesman for
3 your employer?
3 Yarbrough Cable Service.
4
4
5 dispatcher for Memphis Truck and Trailer Services on
5
6 Lamar.
6
7
7 occupation?
8
8
9
9 registered nurse office manager for a psychiatrist.
PROSPECTIVE JUROR: Presently, right now I'm a
PROSPECTIVE JUROR: Susan Stovall. She is a
10 occupation?
10
11
11 have any children?
PROSPECTIVE JUROR: My wife's name is Patricia.
THE COURT: Okay. Do you know of -- do you
12 She's a substitute teacher for the Memphis City School
12
PROSPECTIVE JUROR: Four.
13 system.
13
14
THE COURT: Any children?
15
PROSPECTIVE JUROR: Two girls.
15
16
16
17
18
18
THE COURT: Mr. Viverette, what part of the
19
THE COURT: Thank you. Mr. Stovall, what part
20
PROSPECTIVE JUROR: South Memphis.
21
21
22
22 background?
23 background?
23
PROSPECTIVE JUROR: BS.
24
PROSPECTIVE JUROR: Bachelor's degree.
24
25
25 your employer?
112
111
PROSPECTIVE JUROR: Substitute teacher, Memphis
2 City Schools.
2
3
3
4
4
PROSPECTIVE JUROR: One.
5
5
THE COURT: And do you know of any reason that
6 occupation?
6 you could not serve on this jury and be fair and
7
7 impartial?
PROSPECTIVE JUROR: Elize Viverette, teacher,
8 Memphis City School system.
8
9
9
10
PROSPECTIVE JUROR: Three boys.
10
And, Ms. Snodgrass, what part of the district
11
11 or city are you from?
12
PROSPECTIVE JUROR: Raleigh.
13 and impartial?
13
14
14 background?
15
15
16
And, Ms. Saul, what part of the district or
16 college courses.
PROSPECTIVE JUROR: High school and a few
17 city are you from?
17
18
PROSPECTIVE JUROR: Wolfchase area.
18 your employer?
19
19
PROSPECTIVE JUROR: Flight attendant, Delta
20 background?
20 Airlines.
21
21
22
22
23 your employer?
23
24
24
PROSPECTIVE JUROR: Three girls.
25
PROSPECTIVE JUROR: Secretary, U. S. Department
25 of Agriculture.
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113
could not serve on this jury and be fair and impartial?
and I -- you know, I'm not trying to get out of
2
PROSPECTIVE JUROR: No reason at all.
2 everything, I'm just who he calls.
3
THE COURT: Okay. Thank you. Mr. Murphy, I
3
THE COURT: I understand. Let me ask you a
4 think that may have covered everything. Anything else
4 couple of questions.
5 from the United States?
5
6
MR. MURPHY: No, sir, Your Honor.
6
THE COURT: Just to make sure. One, let me
7
THE COURT: Anything else from the defense?
7 tell you one thing, we will probably select at least one
8
8 alternate in the case, so assuming that there's no
9
THE COURT: All right. If you will each fill
9 emergency, of course, you could serve, and if it turned
10 out your strike sheets and, of course, they're exercised
10 out that he had to go to the hospital or something, we
11 simultaneously, and I will explain to you what is going
11 could let you be excused, that wouldn't be --
12 on. When we first go through the -- and sometimes we have
12
13 a lot of conflicts, in this case not very many. Oh, wait
13 sure I can take care of him, that's all.
14 a minute, we have got somebody who wants to talk to us.
14
15 Ms. Starnes, come around to side bar. Sorry, Ms. Starnes.
15 things can happen.
16
16
17 bench.)
17
THE COURT: Now, let me ask a couple of things.
18
THE COURT: I didn't mean to leave you out.
18 Now, does he -- he's -- is he ambulatory, he gets around
19
PROSPECTIVE JUROR: That's okay. The only
19 on his own?
PROSPECTIVE JUROR: Okay. I just want to make
THE COURT: Right. And so we recognize these
20 thing I had to send in is my husband, his father, his
20
PROSPECTIVE JUROR: Yes. Not well.
21 health is not good, and I am his caregiver, I'm his
21
THE COURT: About how old is he?
22 primary caregiver, I'm who he calls. If something were to
22
PROSPECTIVE JUROR: He's 82.
23 go wrong and I was here and he couldn't get me, he won't
23
THE COURT: Okay.
24 call anybody else. I mean I take care of his finances and
24
PROSPECTIVE JUROR: He has got Parkinson's
25 I coordinate his medical care, and he lives by himself,
25 disease along with some other medical conditions, but the
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115
Parkinson's keeps him from moving around well.
morning, afternoon, somebody is there quite a bit of the
2
THE COURT: How often do you see him?
2 time during every day, we excuse them, we always do.
3
PROSPECTIVE JUROR: Usually about twice a week,
3 That's just pretty routine. If it is somebody who has a
4 and then I talk to him every day.
4 primary responsibility, but is only there a couple of
5
5 times a week, what we usually do is ask them to serve on
THE COURT: Okay. He's become your buddy and
6 that sort of thing, I mean?
6 the jury, but tell them that, you know, they can check in
7
7 with the individual, and -- we ask them not to keep their
PROSPECTIVE JUROR: There's not any other
8 family.
8 cell phone on during court, but, you know, if it is an
9
THE COURT: You're it?
9 emergency that comes up that at that time we will address
10
PROSPECTIVE JUROR: Like I said, Robert would
10 it and excuse them. We need to. But the main question
11 do for him, but he's going to call me. I just take care
11 I'm going to let these lawyers ask -- there's another
12 of everything and have since -- well, for a long time.
12 question they usually ask. Anything else, Mr. Murphy.?
13
THE COURT: For a long time?
13
14
PROSPECTIVE JUROR: He can't drive or anything.
14 your father-in-law situation, is it going to weigh on your
15
THE COURT: Okay. Does he take care of his own
15 mind so much you're going to have trouble listening to the
MR. MURPHY: Ma'am, is the -- thinking about
16 meals or does somebody come in and help him?
16 proof?
17
PROSPECTIVE JUROR: He does do his own meals.
17
18
THE COURT: Does he take any medications that
18
MR. MURPHY: Okay.
19 you have to be concerned about?
19
PROSPECTIVE JUROR: I can't let anybody worry
20
20 me that much, I would go crazy.
PROSPECTIVE JUROR: No, no, he takes care of
21 all of that.
21
22
22 want to know.
THE COURT: Okay. Let -- what we normally do,
THE COURT: But I mean that's the main thing we
23 if somebody is the sole caregiver of somebody who
23
PROSPECTIVE JUROR: Like I said, as long as I
24 requires, you know, constant care, and that doesn't mean
24 know that if something happened, that I can drop and run.
25 every minute, but that means somebody there in the
25
THE COURT: As long as you tell us.
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117
PROSPECTIVE JUROR: You would know. You would
2 reasons, but -- and so they have pretty broad discretion
2 know.
3
the Constitution, they cannot excuse you for those
THE COURT: Just let us know right away and we
3 in peremptory challenges, but not unlimited discretion.
4 will take care of it.
4 In a minute, they're going to hand up their peremptory
5
5 challenge sheets, and we will see who gets to go ahead and
PROSPECTIVE JUROR: Okay. That's the main
6 thing. Thank you.
6 go home and who gets to stay with us. And when we excuse
7
7 that group of people, then we call folks from the panel
8 and ask you some additional questions.
8 court.)
9
THE COURT: All right. Each side can fill out
9
We got a lawyer back there? Somebody who looks
10 their peremptory challenge sheets. There are two kinds of
10 like a lawyer? He's not one, I suppose. He's not a
11 challenges. One is for cause, that's what I indicated
11 lawyer. Okay. He's all right. No problem.
12 earlier, and that's when somebody knows somebody to such
12
(Strike sheets were handed to the Judge.)
13 degree, for example, that they couldn't be fair or maybe
13
THE COURT: Okay. Let me see counsel at side
14 they have had a very similar experience, then, typically,
14 bar.
15 they're allowed to be excused for cause. Once we have got
15
16 14 people who are not excused for cause, then each side
16 bench.)
17 gets a certain number of peremptory challenges, and
17
18 technically -- well, theoretically, they can excuse you
18 defense, but one of them was previously struck by the
19 for any reason, but there are a couple of unconstitutional
19 government, so there are four charged against the
20 reasons that they cannot excuse you, so -- I would like to
20 defendant.
21 correct that. They cannot excuse you because of your
21
22 gender, they couldn't try to knock all the women off or
22 defense struck Mr. White and then the government struck
23 all of the men off. They couldn't excuse you because of
23 Mr. Spurlin and Mr. Salaam, and the defense struck Mr.
24 your race, they couldn't excuse you because of your
24 Smith, Mr. Marlow Smith, and the defense struck Ms.
25 national origin, religion, things that are protected under
25 Starnes in seat seven, so two, three, four, six, seven.
THE COURT: There were five strikes by the
On the first row, defense -- excuse me, the
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119
THE COURT: Appreciate it.
On the second row, the defense struck Ms. Saul in seat
2 nine. The government struck Mr. Viverette in seat 10 and
2
On the second row, we're going to excuse Ms.
3 Ms. Vickers in seat 13. So the rest are accepted as
3 Saul, Mr. Viverette and Reverend Vickers, so thank you.
4 jurors in the case. Any objections by the government?
4 Yes, ma'am, Ms. Starnes, we're going to let you be
5
5 excused. It worked out well for you.
6
MR. BECRAFT: No, Your Honor.
6
7
7 selected because you have been selected as jurors in the
8
MR. BECRAFT: I'm operating under the
8 case, and we're going to ask Mr. Vedder, move over to seat
We're going to reseat the ones who have been
9 presumption there's no back strikes?
9 two. Ms. Snodgrass will actually move to seat three, Mr.
10
THE COURT: There are no back strikes.
10 Stovall to seat four, Mr. Smith to seat five -- Mr.
11
11 Alphonso Smith seat five, Mr. Keith Smith to seat six. So
12 you become the first six jurors that have been accepted in
12 court.)
13
THE COURT: We're going to excuse part of you,
13 the case. We're going to seat another eight individuals
14 eight of you, and keep the rest, and for those who are
14 and ask them a few more questions. We will start with
15 being excused, thanks for being here, and we do appreciate
15 filling seat number seven and then seat eight and so
16 the fact that you were available for service.
16 forth.
17
17
On the first row, we're going to excuse Mr.
THE CLERK: Billy Shaneyfelt. Phillip Smith.
18 White, Mr. Spurlin, Mr. Salaam and Mr. Smith, Mr. Marlow
18 Rose Saulsbury. Freida Straughter. Melanie Stewart.
19 Smith. So first row, seats two, three, four and six and,
19 Patsy Smith. Arun Gandhi. Russell Ingram.
20 Ms. Starnes, seven.
20
21
21 Shaneyfelt?
PROSPECTIVE JUROR: Do we need to call back
THE COURT: Is your last name pronounced
22 tomorrow?
22
PROSPECTIVE JUROR: Shaneyfelt.
23
23
THE COURT: Mr. Shaneyfelt, how are you today?
24 this counts as your jury service. So thanks very much.
24
25
25
THE COURT: We asked quite a few questions.
THE COURT: You will not need to. In fact,
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121
I'm going to sort of reverse my process a little bit and
reason that you could not serve on this jury and be fair
2 just go ahead and ask those people those last questions to
2 and impartial?
3 make sure we have covered that with everybody, and then I
3
4 will ask a couple of follow-up questions. Would you stand
4
THE COURT: We had asked a lot of questions
5 and tell us what part of the district or city you're from?
5 about the type of case and prejudgment and all those
6
PROSPECTIVE JUROR: I'm from Bartlett.
6 questions, did they seem to make sense to you?
7
7
8 background?
8
THE COURT: Do you have any problem in giving
9
PROSPECTIVE JUROR: I have a bachelor's degree.
9 the defendant the presumption of innocence that the law
10
10 requires on each and every count in this case?
11 your employer?
11
PROSPECTIVE JUROR: No problem.
12
12
THE COURT: If the government fails to prove
PROSPECTIVE JUROR: I'm an interface programmer
13 with Baptist Hospital.
13 its case against the defendant on any count or all counts,
14
14 do you understand you have to return a verdict of not
THE COURT: Tell us what that does so we will
15 understand.
15 guilty?
16
16
17 computers, I control that.
17
THE COURT: All right. Well, we talked about
18
18 all of those characteristics, I'm going to ask other folks
19
PROSPECTIVE JUROR: Yes, married.
19 a few other things.
20
THE COURT: And your wife's name and her
20
PROSPECTIVE JUROR: Computers talk to
Hand that back to Mr. Ingram, if you would.
21 occupation?
21 Mr. Ingram, how are you today?
22
22
PROSPECTIVE JUROR: I'm fine, thanks.
23 a school teacher with Shelby County schools, and we have
23
THE COURT: Are you married to a lawyer?
24 two children.
24
PROSPECTIVE JUROR: No, not a lawyer.
25
25
THE COURT: A judge? I know.
PROSPECTIVE JUROR: Wife's name is Pam. She is
THE COURT: Two children. Do you know of any
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123
PROSPECTIVE JUROR: I have two stepchildren.
2
THE COURT: Well, she is also a lawyer.
2
THE COURT: Two stepchildren, right. Do you
3
PROSPECTIVE JUROR: I suppose so. She is my
3 know of any reason that you could not serve on this jury
4 lawyer.
4 and be fair and impartial?
5
5
THE COURT: That's right. You're in trouble,
PROSPECTIVE JUROR: There's no reason I could
6 but that's good. Well, first of all, what part of the
6 not be fair and impartial, however, there is a reason that
7 I can't serve, if it please you.
8
PROSPECTIVE JUROR: Highland Park.
8
9
9 will talk about that in a minute.
THE COURT: I'm going to make a note and we
10 background?
10
PROSPECTIVE JUROR: Okay. Thanks.
11
11
THE COURT: It's Mr. Arun Gandhi?
12 bachelor's degrees.
12
PROSPECTIVE JUROR: Gandhi.
13
13
THE COURT: You're from India?
14 your employer?
14
15
15
THE COURT: And your very famous relative --
PROSPECTIVE JUROR: I have a couple of
PROSPECTIVE JUROR: I'm a general manager. I
16 work for Physiotherapy Associates, one of their divisions.
16 you have a very famous relative?
17
17
18 correct?
18
THE COURT: And before -- I'm going to ask a
19
PROSPECTIVE JUROR: I am married.
19 couple of questions, though. Tell us what part of the
20
THE COURT: Your wife's name is and her
20 district or city you're from.
THE COURT: Okay. You are married, is that
21 occupation?
21
PROSPECTIVE JUROR: Midtown.
22
22
PROSPECTIVE JUROR: Holly Kirby. She is a
23 Tennessee appellate court judge.
23 background?
24
24
PROSPECTIVE JUROR: Home schooler.
25
25 kids?
THE COURT: Do you -- y'all don't have any
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125
and who is your employer?
the district or city are you from?
2
2
PROSPECTIVE JUROR: East Memphis.
3 occupation is teaching nonviolence.
3
4
4 background?
PROSPECTIVE JUROR: I'm self-employed, and my
THE COURT: Exactly. And I was trying to think
5 of the correct name for the center that --
5
6
6
PROSPECTIVE JUROR: The M. K. Gandhi Institute
7 for Nonviolence.
7 your employer?
8
8
PROSPECTIVE JUROR: Housewife.
9
9
10
10
PROSPECTIVE JUROR: Yes, 45 years.
11 occupation?
11
THE COURT: All right. Do you have children?
12
12
PROSPECTIVE JUROR: I have one daughter and one
PROSPECTIVE JUROR: Sanunda. She is a
13 researcher.
13 stepdaughter.
14
THE COURT: Where is she a researcher?
14
15
PROSPECTIVE JUROR: At the institute.
16
THE COURT: Do you have children?
16
17
PROSPECTIVE JUROR: Two.
17
THE COURT: Okay. We did ask everybody, I have
18
18 got two people I'm going to talk to at side bar, but it
19 was a long discussion really about not forming opinions
20
20 before you've heard all the evidence and had the final
PROSPECTIVE JUROR: No. Like him, I have a
21 personal reason.
21 arguments, final instructions on the law. Any problem
22
22 with following those instructions and proceeding in that
THE COURT: Okay. I'm going to put that down,
23 and we'll -- I'll just ask those questions at side bar.
23 manner?
24
24
PROSPECTIVE JUROR: I don't think so.
25
THE COURT: Thank you. Ms. Smith, what part of
25
THE COURT: When you -- when I read the
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127
indictment and we had all that discussion and I read the
something about the law before the case really gets going
2 indictment, did you think -- does that put -- cause some
2 too. Can you keep an open mind, because I think you hit
3 stress for people in terms of being able to remain fair
3 it right on the head, it sort of moves you off center a
4 and impartial?
4 little bit and you have to work to get back to center.
5
PROSPECTIVE JUROR: Kind of.
5
PROSPECTIVE JUROR: I'll try.
6
THE COURT: Okay. No, that's really what I'm
6
THE COURT: Okay. And you understand why we're
7 talking about.
7 trying to do that?
8
8
9
THE COURT: Why do you say that? I think
9
THE COURT: Because it's not fair for anybody
10 you're right, but why do you say that?
10 to start out with some mark on that slate.
11
11
12 it's just -- I mean we all know we have to fill out taxes,
12
THE COURT: Okay. I just wanted to make sure I
13 so I don't know, it just kind of seems strange.
13 covered that with somebody, and everybody agrees.
14
14
PROSPECTIVE JUROR: Well, I don't really know,
THE COURT: Okay. All right. And in the
Let's hand that to Ms. Stewart. Ms. Stewart,
15 law -- in the tax law, there's law about the requirements
15 how are you from?
16 to file taxes and there's also a thing called a good faith
16
PROSPECTIVE JUROR: Just fine, Your Honor.
17 defense, and that's what we're probably going to be
17
THE COURT: What part of the city or district
18 talking about in this case. I don't know that for sure,
18 are you?
19 because they never tell me exactly what they're going to
19
PROSPECTIVE JUROR: Germantown.
20 do, because they don't have to. And it's a theory under
20
21 which a person can proceed without -- perhaps without
21 background?
22 taxes, and the jury just has to decide that question.
22
PROSPECTIVE JUROR: Law school.
23 Now, you can't start out on one side or the other, you
23
THE COURT: And that's not a very profitable
24 have to listen to the law as I give it to you at the end
24 advocation at this point, going to school. How long have
25 of the case and apply that. I'm going to tell you
25 you been going to school?
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129
THE COURT: You know something, we had jurors
PROSPECTIVE JUROR: No, my educational
2 background is law school. I have been an attorney for 22
2 who were lawyers before, that's really not a problem if
3 years.
3 they can do certain things. For example, they have to not
4
THE COURT: I thought so. I thought there was
4 tell everybody else what the law is, they have to take the
5 an attorney out there, and you didn't raise your hand.
5 law from the judge. Now, usually the law I give them --
6
6 because these lawyers will all tell you, it is very clear
PROSPECTIVE JUROR: I'm the senior partner in
7 Stewart and Wilkinson.
7 that that is really the law, but is that something that
8
THE COURT: That's what I though.
8 you would be able to do if you were the -- a juror, that
9
PROSPECTIVE JUROR: I raised my hand.
9 is take the law as I give it to you and not substitute
10
THE COURT: I didn't see you, and I thought I
10 your own opinion about what the law is?
11 had it mixed up.
11
PROSPECTIVE JUROR: Yes, Your Honor.
12
12
THE COURT: Okay. You don't -- now, you do
PROSPECTIVE JUROR: We do insurance defense
13 mainly insurance defense now?
13 work.
14
15 wrong about that.
15
THE COURT: Okay. I want to make sure, I'm
16
PROSPECTIVE JUROR: But I don't disagree.
16 going to go back and ask that question again, have you
17
THE COURT: Do you do tax work?
17 ever done a tax case?
18
PROSPECTIVE JUROR: No, Your Honor, not on a
18
14
THE COURT: I feel much better now. I wasn't
PROSPECTIVE JUROR: Have I ever handled a tax
19 regular -- occasionally we have tax questions, but not
19 case? No. Have I given opinions after research on tax
20 very often.
20 law? Yes.
21
THE COURT: You know, the --
21
22
PROSPECTIVE JUROR: But I am in the Falls
22 connection with 26 United States Code, Section 7201?
THE COURT: Have you ever given an opinion in
23 Building, and the IRS is on the fourth and sixth floor.
23
24
THE COURT: What floor are you on?
24
THE COURT: I want to make sure that we haven't
25
PROSPECTIVE JUROR: The eighth.
25 done that. Now, the other thing is, ladies and gentlemen,
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131
for all the rest of you, I'm not going to go back on my
what I think ought to be done, you realize you don't have
2 other jurors, particularly, but do you realize that if Ms.
2 to agree with her?
3 Stewart is an attorney in the case, we just always make
3
4 sure that the jury understands that she can't answer any
4
THE COURT: Do you have any problem with
5 legal questions, and you can't ask her any legal questions
5 disagreeing with somebody if you think that they're wrong
6 because she is just there as a fact-finder and then a
6 and you're right?
7 person to apply the law. She is not there to give legal
7
PROSPECTIVE JUROR: No, I do not.
8 advice to the jury, and it would be improper to do that.
8
THE COURT: Mr. Vedder, any problem with the
9 Any problem with that, Mr. Shaneyfelt, that you wouldn't
9 fact that you would not be able to turn to somebody and
10 be able to say, now you're a lawyer, you ought to know the
10 say, now, this is what Ms. Stewart says, she is a lawyer,
11 answer to this? You would not be able to do that?
11 therefore, you should agree; you could not do that?
12
12
PROSPECTIVE JUROR: No problem, Judge.
13
THE COURT: Okay. And I'm going to go back to
13
THE COURT: I hope this makes sense to
14 a couple of my jurors that are already selected, I usually
14 everybody. It is real important.
15 don't necessarily do this, but, Ms. Vasser, do you
15
Ms. Snodgrass, any problem with that?
16 understand that you wouldn't be able to defer to Ms.
16
17 Stewart just because she is a lawyer? You couldn't just
17
THE COURT: In other words, you're going to
18 agree with her because she is a lawyer, because you're
18 decide the facts and those fact issues are not ones on
19 there to decide the facts and to apply the law to them,
19 which a lawyer could express an opinion other than just
20 you're not there to just agree. It's a trial by twelve --
20 like everybody else? They would just say, well, I think
21 trial by twelve jurors, not a trial by one juror who is
21 these are the facts, no problem with that.
22 going to tell all the jurors what to do. That's real
22
23 important everybody agree on that. Any problem with that?
23 Stovall, any problem with the fact that you're going to
24
24 have to make up your own mind about the facts, you could
25
THE COURT: If Ms. Stewart says, look, this is
25 not refer to an attorney who happened --
Let me make sure, then, it's Mr. Stovall, Mr.
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133
THE COURT: And the same thing, Mr. Gandhi, you
PROSPECTIVE JUROR: No, Your Honor.
2
THE COURT: That also means that you don't have
2 understand if you're on the panel, you couldn't do that.
3 to elect an attorney foreperson. I'm not saying -- you do
3
I'm going to go to Ms. Patsy Smith, any problem
4 what you want to on that --
4 with that, Ms. Smith?
5
5
PROSPECTIVE JUROR: Huh-uh.
6
THE COURT: But they don't get special status.
6
THE COURT: Even if it turns out that you like
7 Nobody gets a special spot on the panel with special
7 Ms. Stewart, you wouldn't be able to agree with her just
8 deference. Any problem with that?
8 because she is a lawyer, is that okay?
9
9
10
THE COURT: And Mr. Alphonso Smith, any problem
10
THE COURT: Ms. Stewart, I hope that doesn't
11 with the fact that if you do happen to end up with a
11 offend you, but we always check this out, and sometimes we
12 lawyer on the panel, you cannot give their opinion or
12 end up with physicians, we do the same thing with anybody
13 their observations as to the facts any more -- you have
13 who -- you know, if it is a malpractice case, we still ask
14 got to rely on yourself to determine the facts and consult
14 the same question. Now, is that going to be difficult for
15 with all your other members of the jury, you can't just
15 you to sit as a juror and be fair and impartial?
16 rely on one person who happens to have a law degree.
16
17
17
THE COURT: Because -- are you usually aligned
18
THE COURT: And the same thing for Mr. Keith
18 with one side or the other, the government or the defense?
19
19 Smith.
20
PROSPECTIVE JUROR: No, no, Your Honor, no
PROSPECTIVE JUROR: We do civil litigation,
20 Your Honor.
21 problem.
21
THE COURT: Okay.
22
22
PROSPECTIVE JUROR: We -- some of the lawyers
THE COURT: We have actually -- and I think we
23 have already covered it with Mr. Shaneyfelt, so I will
23 in my office may handle some criminal work, but I don't.
24 hand it back to Mr. Ingram.
24
25
25 sure I covered a couple of other things. Are you married?
PROSPECTIVE JUROR: I don't have a problem.
THE COURT: All right. Let's go back and make
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135
THE COURT: I'm fine. What part of the
2
THE COURT: And your husband's name?
3
PROSPECTIVE JUROR: Sam.
3
PROSPECTIVE JUROR: In Mitchell Heights.
4
THE COURT: And what does he do?
4
5
PROSPECTIVE JUROR: He's an insurance adjuster
5 background?
6 for GEICO.
6
7
THE COURT: Has he been busy?
7
8
8 your employer?
9
9
10
PROSPECTIVE JUROR: We have two girls, three
10 City Schools, cafeteria helper, Idlewild Elementary.
PROSPECTIVE JUROR: Okay, I work for Memphis
11 and a half and 19 months.
11
12
12 that school, it's a very interesting school.
THE COURT: They have had some famous alumni at
13
14
14
THE COURT: Of course, there was -- one of the
15
THE COURT: Okay. Thank you. You threw me
15 district judges went to that school. He's retired now.
16 off, I didn't see you raise your hand, so I completely --
16 And then I'm going to tell something I shouldn't probably
17 I thought I was wrong. Nice to have you.
17 say, I think Machine Gun Kelly went to Idlewild, didn't
18
18 he? It was before he became known in his later career,
Now, let's see, help me with pronouncing your
19 last name.
19 very interesting history.
20
PROSPECTIVE JUROR: Straughter.
20
Are you married?
21
THE COURT: I'm going to spell it phonetically
21
22 because you have got lots of letters in there. I
22
23 shortened it, so I will remember it. Ms. Straughter, how
23
PROSPECTIVE JUROR: Four.
24 are you today?
24
25
PROSPECTIVE JUROR: Good. How are you?
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137
could not serve on this jury and be fair and impartial?
2
THE COURT: Okay. Thank you. Ms. Saulsberry?
2
3
3
THE COURT: And I did ask Ms. Patsy Smith
4
THE COURT: What part of the city or district
4 some -- a little longer question, I want to ask one of you
5 are you from?
5 those questions, but do you think that it is difficult to
6
PROSPECTIVE JUROR: Southeast.
6 get back to being a completely neutral person when you
7
7 know the nature of the charges? Does it cause you some
8 background?
8 concern about being able to do that?
9
PROSPECTIVE JUROR: Twelfth.
9
PROSPECTIVE JUROR: Yes, I do.
10
10
THE COURT: And it does seem very important
11 your employer?
11 that we all be able to do that. Do you think with effort
12
PROSPECTIVE JUROR: Retired.
12 people can go back to that point and really put the
13
THE COURT: From what? We just want to make
13 government to its burden of proof in this case?
14 sure you're not a retired IRS agent?
14
PROSPECTIVE JUROR: I think we can.
15
PROSPECTIVE JUROR: From General Electric.
15
THE COURT: All right. I'm going to ask you to
16
THE COURT: Okay. And are you married?
16 hand that over to Mr. Phillip Smith. We have got lots of
17
17 Smiths on the panel. Mr. Smith, how are you doing today?
18
18
PROSPECTIVE JUROR: I'm doing fine.
19 occupation?
19
20
PROSPECTIVE JUROR: Johnny, retired.
20 are you from?
21
THE COURT: What did he retire from?
21
PROSPECTIVE JUROR: I'm from Raleigh.
22
PROSPECTIVE JUROR: Cleowrap.
22
23
23
PROSPECTIVE JUROR: High school plus trade
24
PROSPECTIVE JUROR: One daughter.
24 schools.
25
25
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139
your employer?
2
PROSPECTIVE JUROR: I'm semi-retired. I have a
2
THE COURT: Because it takes a lot of energy.
3 landscape business now.
3 Do you know of any reason that you could not serve on this
4
4 jury and be fair and impartial?
THE COURT: Okay. I would assume that has been
5 busy lately, though, with all this --
5
PROSPECTIVE JUROR: I have had a little bit of
6
PROSPECTIVE JUROR: Well, not too bad.
6 experience with persons not paying tax. I had some
7
THE COURT: What did you do before you retired?
7 employees that stopped paying tax, and they tried to
8
PROSPECTIVE JUROR: I worked for E. I. DuPont
8 convince me not to pay tax.
9 for 32 years.
9
THE COURT: I'm going to do this, I'm going to
10
THE COURT: In what section?
10 let us talk about that just a little bit at side bar. Are
11
PROSPECTIVE JUROR: Well, I worked in
11 you familiar at all with the law in this area?
12 operations, hydrogen peroxide, sodium cyanide,
12
13 acrylonitrile and in maintenance the last ten years.
13 on the taxes.
14
14
THE COURT: The last ten years, okay. It is an
PROSPECTIVE JUROR: I haven't studied the law
THE COURT: We will talk about that in just a
15 interesting -- it has been an interesting place to work.
15 minute. We have got three people to talk with at side
16 Are you married?
16 bar, and I'm going to have Mr. Ingram come around first.
17
17
PROSPECTIVE JUROR: I'm married. My wife's
18 name is Wilma. I have two sons.
18 bench.)
19
THE COURT: Does she still work?
19
PROSPECTIVE JUROR: Good afternoon.
20
PROSPECTIVE JUROR: She is a domestic employee.
20
THE COURT: How are you doing today?
21
THE COURT: Okay. She works -- you're saying
21
22 she works at home?
22
THE COURT: What is your situation?
23
23
PROSPECTIVE JUROR: I'm in school.
24
THE COURT: That's the best deal anybody can
24
THE COURT: Oh.
25
PROSPECTIVE JUROR: I'm a master candidate at
25 ever get is for you to have a spouse that will do that.
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141
THE COURT: How are you doing?
Vanderbilt, and I will miss school, which is -- I really
2 can't afford to do that.
2
PROSPECTIVE JUROR: Very well, thank you.
3
3
THE COURT: What is your situation?
4 right now?
4
PROSPECTIVE JUROR: I have to be in Wisconsin
5
5 over the weekend, conduct some workshops there, and I
THE COURT: You're actually during session
PROSPECTIVE JUROR: Actually, the pre-session
6 starts tomorrow and then the full session starts on
6 don't know if I will be able to get back then by Monday in
7 Thursday morning. So, you know, it's --
7 case the -- in case the case goes on Monday.
8
8
THE COURT: Does anybody have any problem with
THE COURT: That's really what -- do you have
9 letting him be excused?
9 any questions or what do you think?
10
MR. BECRAFT: No.
10
11
THE COURT: Mr. Murphy?
11 Wisconsin?
12
MR. MURPHY: No, Your Honor. I'm falling apart
12
THE WITNESS: Friday night.
13
THE COURT: And where are you going up there?
14
PROSPECTIVE JUROR: Appleton. That's a long
13 here.
14
PROSPECTIVE JUROR: I would like to serve at
MR. MURPHY: When are you leaving to go up to
15 some point. Is there any way I can defer and --
15 drive, Judge.
16
16
THE COURT: Sure. Mrs. Saba, let Ms. Dote
THE COURT: Any objection to allowing Mr.
17 know. When will you be out of school?
17 Gandhi to be excused?
18
PROSPECTIVE JUROR: May of 2004.
18
MR. MURPHY: No, sir.
19
THE COURT: Just put him down for May of 2004.
19
20
20
THE COURT: I think that really might be an
21 impediment. I take it you have to get ready for the
21 court.)
22
THE COURT: Mr. Gandhi, if you would come
22 workshop?
23 around, please.
23
24
24
THE COURT: You would like to be excused?
25
PROSPECTIVE JUROR: Please.
25 bench.)
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143
THE COURT: Without objection, we will let you
taxes, and I understand that they were -- did get some
2 be excused.
2 time out of it. I'm not sure about Pollard, but I think
3
MR. BECRAFT: No objection, Your Honor.
3 Eddie Perry did.
4
MR. MURPHY: Thank you.
4
THE COURT: Well, do you --
5
5
PROSPECTIVE JUROR: It doesn't have any effect
6 on me. I mean --
6 court.)
7
THE COURT: Mr. Smith, yes, sir.
7
8
8 determined something about their argument about not paying
9 taxes. Did you consider --
9 bench.)
10
THE COURT: At some point in time, you
THE COURT: We're going to let you stand right
10
PROSPECTIVE JUROR: At the time I thought they
11 here. What is your situation, you had some employees
11 were wrong, but I didn't believe them enough that I -- I
12 who --
12 paid my taxes.
13
PROSPECTIVE JUROR: Well, I worked with some
13
THE COURT: Okay. Any questions from anybody
14 guys that didn't pay income tax for several years. They
14 else?
15 tried to convince me not to pay income tax, and I think
15
MR. MURPHY: No.
16 they were convicted and sentenced. It was Eddie Perry and
16
MR. BECRAFT: None.
17 a John Pollard, and I was one of their supervisors, and
17
THE COURT: Okay. We're -- we'll keep you.
18 the other one was before I was supervisor, and I don't
18 Thanks very much.
19 know how many years they didn't pay tax, but they didn't
19
20 convince me, I paid tax and everything, but --
20 court.)
21
THE COURT: Were they at DuPont?
21
22
22 up there?
23
THE COURT: At DuPont?
23
24
PROSPECTIVE JUROR: Both of them worked at
24 come around.
25 DuPont. And it was several people that wasn't paying
25
PROSPECTIVE JUROR: Can I ask to speak to you
THE COURT: Yes, sir. Okay, we will let you
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145
what we do is we get certified under that type of facility
bench.)
2
PROSPECTIVE JUROR: I'm not trying to be exempt
2 whereas we take care of babies, more or less, six months
3 from the case, I have one problem that I have come up with
3 to three years old. Once they become three years old,
4 is we're having in-service training where I work at at
4 then they graduate from my program, and they move to
5 Porter Leath, and I'm doing a CDA class in the evening
5 another program, and I just started, you know, this
6 around 5:00 o'clock at the library. I don't want to be
6 program, so I didn't have any -- I didn't have enough
7 exempted from the class, I want to be a part of it, but
7 hours even with my master's in child care, so they are
8 would that be a problem?
8 sending me to CDA class, okay, so I can get my
9
9 credentials.
THE COURT: We will normally leave between 5:00
10 and 5:15, so that is going to be an impediment for that
10
11 class, I think.
11 continue to work at Porter Leath?
12
12
13
THE COURT: And when does Porter Leath start
13
THE COURT: How often is the course offered?
14 in-service?
14
PROSPECTIVE JUROR: It's three days a week.
15
15 It's weekly right now, because we graduate the 27th of
PROSPECTIVE JUROR: We started today, but I had
THE COURT: Is this required for you to
16 to be here today.
16 September. It is like three days a week.
17
THE COURT: Right, exactly.
17
THE COURT: How long -- and it's now starting?
18
18
PROSPECTIVE JUROR: It just started this past
19
THE COURT: Exactly. Now, what's this class
19 week, yes, sir.
20 you're taking at the library?
20
21
21 already?
PROSPECTIVE JUROR: It's called CDA,
THE COURT: How many classes have you attended
22 certification for day treatment.
22
PROSPECTIVE JUROR: Eight.
23
THE COURT: What do you do the skills for?
23
THE COURT: And how long does it go in the
24
PROSPECTIVE JUROR: Well, basically what we do
24 evening?
25 is, I'm working early childhood development program, and
25
PROSPECTIVE JUROR: It goes from like 5:00
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147
THE COURT: We can, and we will actually do
o'clock until like 7:30.
2
THE COURT: Where do they teach the course, is
2 that. People ask us to do that.
3 it at the main library?
3
4
PROSPECTIVE JUROR: Yes, sir, on Poplar.
4
5
THE COURT: And does it start on time at 5:00?
5 court.)
6
PROSPECTIVE JUROR: Sometimes it does.
6
PROSPECTIVE JUROR: Your Honor, may I address
7 Sometimes it doesn't, you know. Annette Knox is giving
7 you also?
8 the class, so it really -- it varies.
8
THE COURT: Sure, come around.
9
THE COURT: Questions?
9
10
10 bench.)
11
THE COURT: Do you think you ought to be
11
PROSPECTIVE JUROR: I'm sorry, I just wondered,
12 excused in this?
12 I have in the past and currently owe back taxes, but the
13
13 IRS has always been very fair with me on setting up
PROSPECTIVE JUROR: Well, it depends on you
14 payment plans, so I just wanted to let that come out.
14 all.
15
THE COURT: I think they would like you to stay
15
THE COURT: Well, I don't think I have ever,
16 regardless.
16 but that's the nature of what I do.
17
17
PROSPECTIVE JUROR: Right, right. I enjoy it,
PROSPECTIVE JUROR: It's part of being
18 I have no problem as long as it doesn't interfere with my
18 self-employed.
19 job.
19
20
THE COURT: It's going to make you a little
THE COURT: I was going to say I think that is
20 part of being self-employed. Is that going to cause you
21 late to those classes, but we'll -- I'll -- we usually
21 to feel uncomfortable?
22 leave by 5:15 so that will make -- if you get there by
22
23 5:30 --
23 always been very fair to me.
24
PROSPECTIVE JUROR: As long as the court can
25 notify Porter Leath and let them know.
24
PROSPECTIVE JUROR: Oh, no, sir. The IRS has
THE COURT: They usually work out payment
25 plans, but this is not about that.
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149
THE COURT: I'm fine. What part of the
PROSPECTIVE JUROR: I understand that.
2
THE COURT: This is about a good faith defense.
3 I don't even -- I don't even know that they're going to
3
4 argue about that -- they're just going to argue --
4
5
MR. BECRAFT: Her beliefs.
5 background?
6
THE COURT: I will get more into that, Your
6
PROSPECTIVE JUROR: Technical college.
7 Honor.
7
8
8 your employer?
9
THE COURT: And I will give you the law on
9
PROSPECTIVE JUROR: Vice-president, Commercial
10 that. It's not going to be a real lengthy instruction.
10 Filter, Incorporated.
11 Do you have any problem ruling against the IRS if they
11
THE COURT: Where are they located?
12 have been nice to you, that's the question?
12
PROSPECTIVE JUROR: Holmes Road and Lamar.
13
13
14
THE COURT: Well, I mean --
14
15
PROSPECTIVE JUROR: I do feel like I could be
15
16 occupation?
16 fair.
17
THE COURT: Okay.
17
18
18 student, starts teaching at U of M next year.
19
19
20
21
20 court.)
21
THE COURT: I'm going to call two more names to
PROSPECTIVE JUROR: Alicia, and she is a
22 take seat 13 and 14.
23
THE CLERK: Donald Stage. Larry Inderbitzen.
23
24
THE COURT: Mr. Stage, how are you?
24
THE COURT: Okay. Thank you. Mr. Inderbitzen?
25
PROSPECTIVE JUROR: Good. How about you?
25
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PROSPECTIVE JUROR: No, she isn't. She is at
THE COURT: Tell us what part of the city or
2 district you're from.
2 the Perkins location.
3
PROSPECTIVE JUROR: I'm from Midtown.
3
4
5 background?
5
6
PROSPECTIVE JUROR: I have a BA degree.
6
THE COURT: You know, we're trying to ask
7
7 somebody in every new group if they have frankly such
8 your employer?
8 skepticism about the case that they are going to find it
9
9 difficult to decide the case solely on the evidence that
PROSPECTIVE JUROR: I'm in sales with Memphis
10 Glove Company.
10 comes from the witness stand and the law as I give it to
11
11 them? You're at Memphis Glove and, of course, you have
THE COURT: You know, I have this recollection
12 that Memphis Glove is a really big glove company, is that
12 been there how long?
13 right?
13
PROSPECTIVE JUROR: Five years.
THE COURT: Five years. And you see why
14
PROSPECTIVE JUROR: Yes, it is considerable.
14
15
THE COURT: I've heard that it is one of the
15 someone might be concerned?
16 larger ones around.
16
PROSPECTIVE JUROR: Sure, absolutely.
17
17
THE COURT: That this might be confusing.
18
18 There is such a thing as a good faith defense. I don't
19
PROSPECTIVE JUROR: Yes. I have a wife named
19 know whether -- I don't know what the facts are, and if I
20 Rebecca, and three children.
20 did, I couldn't tell them anyway, because that's not my
21
21 job. My job is to make sure that we get twelve people who
THE COURT: What -- does your wife work outside
22 the home?
22 haven't already made up their mind one way or the other
23
23 and who are going to listen to the evidence and then apply
PROSPECTIVE JUROR: Yes, she does. She works
24 for Broom Corn Fabric.
24 the law to the facts as they determine the facts to be,
25
25 and you're going to make some crucial factual decisions in
THE COURT: Is she at the Midtown store?
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this case, it sounds like to me. Does it sound like that
instructions on the law about what this defense is about
2 to you?
2 and about how you have to -- what has to be shown in order
3
3 for it to be the prevailing theory? And then -- and then
4
THE COURT: And some things are not going to be
4 decide the case applying the law to the facts as you
5 in dispute. I don't want to get too far ahead, but I
5 determine -- that all twelve of you determine those facts
6 don't know that the defense is going to say -- they're not
6 to be; can you do that?
7 going to say, well, I really did file my income tax
7
PROSPECTIVE JUROR: Yes, sir. Yes, sir.
8 return, they're not going to say that. That is not what
8
THE COURT: This is not a chance for anybody to
9 they're saying. They're saying that, I think -- if I get
9 tell the government that they don't like paying taxes,
10 this wrong, they will quickly tell me -- that Ms. Kuglin
10 because it -- who likes to pay taxes? You know, I don't.
11 had a good faith belief that she did not have to file
11 I will take my hand down. Nobody likes to pay taxes, so
12 these returns. I have said it as simply as I could.
12 it is not about liking to pay taxes. Well, I wasn't
13
MR. BECRAFT: Yes, Your Honor.
13 trying to pick on you, but you looked -- you're the last
14
THE COURT: You don't have to agree with me
14 one.
15 just because I'm sitting up here, believe me, that's not
15
All right. Now, Mr. Murphy, I'm going to --
16 the point, but that's -- and there's some law about that.
16 you have got some questions for the panel, I know you do
17 And if a juror is already on the jury and said, heck, I
17 of the new panelists.
18 don't believe that, then you can't be fair and impartial.
18
19 Now, if a juror says, oh, I'm already going to believe
19
THE COURT: So I will let you ask those
20 that, that is not right either. Does that seem
20 questions, and then we're going to take a break, though,
21 reasonable? You have got to wait and listen to the proof.
21 in about 15 minutes.
22
22
23
THE COURT: Now, can you be neutral and listen
23 and gentlemen, the new members of the panel. I have a few
MR. MURPHY: Yes, sir. Good afternoon, ladies
24 to the proof and only decide after you have heard all of
24 questions to ask you. Do any of you, ladies and
25 the evidence, the final arguments of counsel, the final
25 gentlemen, that were just seated, do you know any of the
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parties, anybody know me, the agents, Ms. Kuglin, the
has to prove its case beyond a reasonable doubt? Does
2 defendant, the defense lawyers? No, okay. Do y'all know
2 everybody understand that? Does anybody have a problem
3 anything about the case? Have you ever heard of people
3 with that? Does anybody think our burden should be
4 talking about the case, speaking about the case? Nobody
4 higher? Does anybody think our burden should be lower?
5 is speaking up, so I'm going to take that to be a no.
5 Nobody is speaking up, so, again, I'm going to take it
6
6 that that is not a problem for anybody.
Income taxes are always a sensitive subject.
7 You know, the judge said raise your hand if you like
7
8 paying taxes. Nobody likes paying taxes, that's a given.
8 the jurors decide the facts, they decide whether the
9 The question in this case is does the fact -- does the --
9 government proved their case, but the judge will charge
10 is there something about the tax law or the tax code that
10 you with what the law is. He'll say, you know, here is
11 just upsets you so much or makes you mad or concerns you
11 what -- how -- the manner in which tax evasion is defined.
12 so much that you can't be a fair juror in this case? And
12 This is what the statute says. This is the law that
13 either way, you know, you may think that the government
13 you're to apply. Does everybody understand that even if
14 shouldn't prosecute people that don't pay taxes or you may
14 you think that the law is stupid, ludicrous, that you
15 think the government ought to prosecute everybody that
15 still have to apply it? Does everybody understand that?
16 doesn't pay taxes; anybody have strong feelings one way or
16 Okay. Everybody's head is nodding. You can't substitute
17 the other? Nobody is speaking up, so I'm going to take it
17 what you think the law ought to be for what the judge
18 to mean one of two of things, either you ate a big lunch
18 tells you it is.
19 and you're dozing off or you don't have a problem with
19
20 that proposition.
20 who will come in and testify, and jurors in these cases
21
21 that we have in federal court decide the case that is
Do you, ladies and gentlemen, understand that
Now, the law -- the way a jury trial works is
Now, in this case, you'll hear from witnesses
22 as the defendant sits before you now, she is innocent, she
22 based on the proof that the judge -- the witness testimony
23 is presumed to be innocent? Does everybody understand
23 and the exhibits, does everybody understand that you can't
24 that? Does anybody have a problem with the presumption of
24 get back in the jury room and start talking, say, now,
25 innocence? Does everybody understand that the government
25 wait a second, my brother-in-law who is on the police
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PROSPECTIVE JUROR: Maybe. We had a bad
force or my brother-in-law who is an accountant says
2 that's not the way things work? Does everybody understand
2 experience.
3 you can't decide the case that way? You have got to
3
4 decide it on the facts. Anybody have a problem with that?
4 side bar?
5 If you haven't already told us about it, has anybody had
5
THE COURT: You can.
6 any problems with the IRS?
6
Ms. Smith, I'm going to let you come around,
7
Okay. Yes, ma'am, what kind of problems?
7 too.
8
PROSPECTIVE JUROR: We were audited about seven
8
PROSPECTIVE JUROR: Oh, okay.
9 years ago. Oh, I'm sorry. We were audited about seven
9
10 years ago.
10 bench.)
11
11
THE COURT: How are you doing?
12 it a good experience, bad experience?
12
PROSPECTIVE JUROR: Freezing.
13
13
THE COURT: What did they do to you?
14 experience.
14
PROSPECTIVE JUROR: They treated my husband
15
MR. MURPHY: Bad experience?
15 like dirt. He said they acted like he was nobody, and it
16
16 really wasn't his fault. He had one figure and his boss
17
MR. MURPHY: Based on that experience, is that
17 had another. It mounted out that we had to pay like $250
MR. MURPHY: Okay. Is it -- as a result, was
PROSPECTIVE JUROR: No, it was a bad
MR. MURPHY: Okay. Judge, can we approach at
18 going to change the way you approach the case or look at
18 more, and he said they really -- he said they acted like I
19 the case?
19 was nobody.
20
PROSPECTIVE JUROR: No, I'll try to be fair.
20
THE COURT: That's a bad experience.
21
MR. MURPHY: Okay. Well, the question is, can
21
PROSPECTIVE JUROR: Yeah, it was really bad for
22 you be fair? Can you put that out of your mind?
22 him. And so -- but we just had problems.
23
PROSPECTIVE JUROR: I'll do my best.
23
24
MR. MURPHY: Okay. You think you will be able
24 more questions. You know, the idea that people who work
25 to, though?
THE COURT: Mr. Murphy may have a couple of
25 in positions of authority like that, which seem to be
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159
without any regulation, sometimes are going to step on
2 some toes pretty badly.
2
3
3 questions.
4
THE COURT: The question would be, you know, is
4
THE COURT: How long ago was this?
5 that going to be something that is going to be on your
5
PROSPECTIVE JUROR: About six or seven years
6 mind when you're making a decision?
6 ago.
7
7
PROSPECTIVE JUROR: I don't know. I hope it
MR. MURPHY: Judge, I don't have any further
THE COURT: Are you saying that you -- if you
8 won't. I will try not to.
8 were picked as a juror in this case, could you lay that
9
9 experience aside?
THE COURT: Did you go down there with him when
10 he went?
10
11
11 depends on what comes up, I guess. I don't know. I know
PROSPECTIVE JUROR: No, he wouldn't let me go.
PROSPECTIVE JUROR: I don't know. It just
12 He went by hisself, but he just -- you know, they just --
12 I'm not helping you.
13 he told me how they treated him and --
13
14
THE COURT: Right.
14 tell us the truth. I'm going to ask you to have a seat
15
PROSPECTIVE JUROR: He thought they over -- you
15 over in that little swivel chair and let me talk to these
THE COURT: Well, that's -- you're supposed to
16 know, they kind of showed their authority or something.
16 folks.
17
THE COURT: Unreasonably unpleasant?
17
18
PROSPECTIVE JUROR: Right, right.
18 bench.)
19
THE COURT: Well, Mr. Murphy, questions?
19
20
MR. MURPHY: Well, it sounds to me like it
20 her for cause.
(The prospective juror stepped away from the
MR. MURPHY: Judge, I'm going to move to excuse
21 was -- it was truly a bad experience?
21
THE COURT: I think we're going to have to.
22
PROSPECTIVE JUROR: It was.
22
MR. BECRAFT: No problem, Judge.
23
MR. MURPHY: Okay. It sounds to me too like
23
24 you're -- you're going to try to put it aside, but you're
24 court.)
25 not really sure you can?
25
THE COURT: Ms. Smith, thanks, we're going to
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let you be excused. We appreciate it.
exclude --
2
2
3
THE COURT: Thank you. Now, everybody wants to
3 asked the question, and I answered.
PROSPECTIVE JUROR: I'm just being upfront. He
4 come see me. Do you need to see me? Come on around.
4
5
5 is, because yours is fundamentally sort of a different
THE COURT: No, that is fine, and the question
6 bench.)
6 situation, I think, this is -- the assertion is here is
7
7 tax evasion.
PROSPECTIVE JUROR: No sense in putting out
8 dirty laundry in the public.
8
PROSPECTIVE JUROR: I understand.
9
THE COURT: No.
9
THE COURT: You didn't have any allegation of
10
PROSPECTIVE JUROR: When I was a business
10 tax evasion?
11 owner, I ran into some troubles, and my assets, personal
11
12 and business, were frozen by the IRS, and I don't know if
12
THE COURT: Yours was inability to pay some
13 I could be fair and impartial.
13 taxes when they came due?
14
THE COURT: Okay. How long did that happen?
14
15
PROSPECTIVE JUROR: It was about 15 years ago.
15
THE COURT: They apparently came and seized
16
THE COURT: What kind of business was it?
16 assets in your business?
17
PROSPECTIVE JUROR: My wife and I owned a gift
17
PROSPECTIVE JUROR: Froze it.
18 shop, and we did manufacturing and we owned it for ten
18
THE COURT: And put you out of business
19 years.
19 essentially, I guess?
20
PROSPECTIVE JUROR: Eventually.
21 disagree with --
21
THE COURT: And they asserted tax liability,
22
22 did you agree with their calculation of taxes?
20
THE COURT: Okay. Did -- did -- did you
PROSPECTIVE JUROR: No, I didn't disagree, it
23 was just the process was not very pleasant.
23
24
24 some degree.
THE COURT: Okay. Well, if we exclude
25 everybody who has had a bad experience, we would
25
PROSPECTIVE JUROR: Maybe, yes. Maybe not. To
THE COURT: To some degree?
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163
MR. BECRAFT: This experience, if you're picked
2
THE COURT: Did you find them to be unwilling
2 as a juror, this experience that you had would not cause
3 to listen to your point of view during that process or did
3 you to be against the position of the government?
4 they listen, they just -- what did you find?
4
5
5 The problem I had in the repayment that I had, okay, I
PROSPECTIVE JUROR: They listened. I felt it
PROSPECTIVE JUROR: This is two-edged, okay.
6 was a challenge, okay, to get to the finality of it.
6 have a feeling on this side and then, again, I look at the
7
THE COURT: Okay. Well, I mean this is --
7 young lady over here on this side who has gone through
8
PROSPECTIVE JUROR: I don't have a problem with
8 some tax evasion, where I went through some bad years of
9 being a juror, I don't.
9 my life doing repayment on income tax, okay. Being fair
10
10 to you too.
THE COURT: Right. You know, I think the main
11 thing is to make disclosure and say this happened to me,
11
MR. BECRAFT: Yeah.
12 it was a really bad experience, but can you follow the law
12
THE COURT: Okay.
13 and can you decide the facts fairly and impartially, can
13
PROSPECTIVE JUROR: Did I answer your question?
14 you do those two things?
14
MR. BECRAFT: Sure did.
15
15
THE COURT: Anything else?
16 I wanted to be upfront.
16
17
17
18 you some questions.
18
19
19 court.)
PROSPECTIVE JUROR: I think I can, but, again,
THE COURT: Absolutely. Let me let them ask
MR. MURPHY: Sir, the only question I have, in
20 deciding this case, can you put the experience you had
20
THE COURT: We're going to call somebody to
21 with the IRS out of your mind? In other words, when you
21 take seat 12, and we're going to ask some questions and
22 go back there, that goes in a closet, so to speak, and you
22 we're going to take a break right after that.
23 decide this case based on the facts and the law?
23
THE CLERK: Stephen Sciara.
24
PROSPECTIVE JUROR: I think I can.
24
THE COURT: I'm sorry, spell your last name for
25
25 me.
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PROSPECTIVE JUROR: S-C-I-A-R-A.
2
THE COURT: Okay. Mr. Sciara, what part of the
but that's what he does.
2
PROSPECTIVE JUROR: I don't know, I do really
3 everything. I have a total certified executive chef.
4
PROSPECTIVE JUROR: Cooper Young.
4
THE COURT: All right. Well, are you married?
5
5
PROSPECTIVE JUROR: Yes, I have a wife, Sheila.
6
PROSPECTIVE JUROR: I have a high school and a
6
THE COURT: And what is her occupation and what
7 culinary degree.
7 is her employer?
8
8
PROSPECTIVE JUROR: She is a student at the
9 your employer?
9 moment.
10
10
THE COURT: All right. Children?
11 Mantia's.
11
PROSPECTIVE JUROR: One daughter, 22.
12
12
PROSPECTIVE JUROR: I'm an executive chef with
THE COURT: You want to tell everybody where
13 Mantia's is? This is your chance for an ad?
14
PROSPECTIVE JUROR: Poplar and Mendenhall.
14
15
THE COURT: Okay. That's right, exactly,
15 really into it, but I could do it.
PROSPECTIVE JUROR: No, I could. I'm not
16 exactly. Did you all have a lot of business during the
16
THE COURT: You sound like the perfect juror.
17 storm, or were you out of business?
17
Okay. Mr. Murphy has got some questions for
18
18 you, other folks has got some questions for you.
PROSPECTIVE JUROR: Actually, we had power and
19 did a lot of business.
19
MR. MURPHY: Judge, I thought --
20
THE COURT: What is your specialty?
20
THE COURT: Oh, we're going to take our break.
21
PROSPECTIVE JUROR: Really all European.
21 Sorry, thanks. We're going to take our afternoon break.
22
THE COURT: Executive chef is in charge of
22 Seven things. Don't talk about the case among yourselves.
23 everything and then sometimes you will have people who do
23 Don't let anybody talk with you about the case. If
24 pastries, sometimes people do -- I have a relative who
24 anybody tries to talk to you about the case, report that
25 does just meat, I don't know how he managed to do that,
25 immediately to one of our security officers, a member of
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my staff or to me. Of course, don't speak to the lawyers
selected, from Judge McCalla, and that's the law that
2 or the parties at all. They are not allowed to talk to
2 you're to use in this case?
3 you. You're not allowed to them. Don't do any research,
3
PROSPECTIVE JUROR: Correct.
4 make any inquiry on your own, and, of course, don't read
4
MR. MURPHY: I believe this lady right here.
5 anything in the newspaper, watch anything on television or
5
PROSPECTIVE JUROR: DUI and murder case.
6 listen to anything on the radio about the case and, of
6
MR. MURPHY: Over in -- you said DUI?
7 course, keep an open mind until you have heard all the
7
PROSPECTIVE JUROR: DUI and murder case.
8 proof in the case, final arguments of counsel and final
8
MR. MURPHY: And was that over in state court?
9 instructions on the law. We're going to take -- we have
9
10 got a lot of folks, we're going to take a fifteen-minute
10
MR. MURPHY: And same question, you understand
11 break, come back, and I think we will get our jury fairly
11 that the law that you apply in this case will come from
12 quickly.
12 Judge McCalla?
13
13
14
THE COURT: Kind of wait for word that we have
14
MR. MURPHY: Okay. Thank you, ma'am. Do any
15 got everybody, and then when I don't -- I think we do,
15 of you, ladies and gentlemen, have any relatives that work
16 though. We're in good shape. Yes, sir, you may proceed.
16 for the federal government, any federal agencies, IRS,
17
17 Department of Agriculture?
MR. MURPHY: Yes, sir, Your Honor. Have any of
18 you, ladies and gentlemen, that have just been called for
18
Yes, sir.
19 jury service ever served on a jury before?
19
PROSPECTIVE JUROR: I have two uncles -- two
20
20 uncles in the TBI and cousin in the Olive Branch Police
Yes, sir. Can you tell me us about what kind
21 of jury you served on?
21 Department and a cousin in the Knoxville Sheriff's
22
PROSPECTIVE JUROR: It was a criminal case.
22 Department.
23
MR. MURPHY: Okay. I know I have probably been
23
MR. MURPHY: Now, the fact that you have got
24 over this too many times already, but do you understand
24 those family members in law enforcement, is that going to
25 that you will get the law in this case, if you're
25 influence your ability to decide this case? In other
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169
PROSPECTIVE JUROR: I try cases all the time.
words, you're not going to vote one way or another way
2 because of how they would react to your vote?
2
MR. BECRAFT: Okay. What kind of litigation do
3
3 you do?
4
MR. MURPHY: Okay. Thank you. Okay.
4
PROSPECTIVE JUROR: Civil, insurance defense.
5
Two last things. Now, you, ladies and
5
MR. BECRAFT: Have you ever -- how long have
6 gentlemen, understand that you have got to follow the law
6 you been practicing law?
7 that the judge gives you no matter what you think about
7
8 it? If you think it is stupid, crazy, whatever, you have
8 in state court.
9 still got to follow it, is that going to be a problem for
9
10 anybody?
10 cases?
11
11
12 yet that you think it's something that the lawyers and the
12
MR. BECRAFT: And you know most lawyers never
13 judge ought to know? Anything that might affect your
13 get a chance to sit on a jury.
14 decision in the case? Okay. Well, thank you, ladies and
14
15 gentlemen, I'm going to sit down.
15 that.
16
MR. BECRAFT: May it please the court.
16
17
THE COURT: Certainly.
17 you would probably like to be a juror in this case? You
18
MR. BECRAFT: Ladies and gentlemen, for the new
18 get to go where nobody has gone before.
Is there anything that anybody hasn't told us
PROSPECTIVE JUROR: Twenty-two years. Mostly
MR. BECRAFT: Okay. And that includes trying
PROSPECTIVE JUROR: I know. I'm well aware of
MR. BECRAFT: I take it with that in mind that
19 panel members up here, I want to direct my questions at
19
PROSPECTIVE JUROR: I think it would be very
20 you. For the eight of you, have any of you or any member
20 interesting.
21 of your family or close friend been involved either as a
21
22 plaintiff or a defendant in a civil or a criminal case?
22 want to ask this question: If you get back there in that
23
Yes, ma'am.
23 jury room, can you make a promise to me and Judge McCalla
24
PROSPECTIVE JUROR: Well --
24 and Mr. Murphy, that you won't use your law experience or
25
MR. BECRAFT: Ms. Stewart.
25 try to dictate to others about what the law might be that
MR. BECRAFT: Okay. Now, being a lawyer, I
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MR. BECRAFT: Is -- we understand that that is
would be applicable in this case?
2
PROSPECTIVE JUROR: I would not.
2 a civil case in which you were a defendant. This is a
3
MR. BECRAFT: Would you be fair and impartial
3 criminal case. Can you -- can you completely lay aside --
4 to both sides?
4 I know you're probably not happy with what is going on in
5
PROSPECTIVE JUROR: Absolutely.
5 reference to your civil litigation, but can you lay that
6
MR. BECRAFT: Would you base your verdict on
6 aside and if you're picked as a juror in this case not
7 what you hear in the way of testimony in this case,
7 let, you know, your participation in the judicial system
8 documents that you see, all the other evidence?
8 affect your verdict in this case?
9
PROSPECTIVE JUROR: And the law.
9
PROSPECTIVE JUROR: I think so.
10
MR. BECRAFT: Okay. Anybody else got a
10
MR. BECRAFT: Anybody else got -- Mr. Stage?
11 response to being a party?
11
PROSPECTIVE JUROR: My father was on a ladder
12
12 attached to a building about six feet off the ground, came
PROSPECTIVE JUROR: You say a lawsuit that we
13 were in?
13 unbolted and he fell off and ruptured two disks.
14
MR. BECRAFT: Yes.
14
15
PROSPECTIVE JUROR: I have got a lawsuit going
15 workmen's comp?
16 now.
MR. BECRAFT: He has got a claim, I guess, for
16
PROSPECTIVE JUROR: I don't know what it is.
MR. BECRAFT: He has got a personal injury type
17
MR. BECRAFT: Oh, you do?
17
18
18 claim that he's asserting against somebody else?
19
MR. BECRAFT: And you are Mr. Smith. What is
19
20 the nature of that case?
20
MR. BECRAFT: Can you lay aside your father's
21
21 civil litigation, and if you're picked as a juror in this
PROSPECTIVE JUROR: Well, this was a wreck my
22 son had in my car, and I'm being sued for the wreck.
22 case, you know, kind of ignore that and just limit your
23
23 testimony, limit any decision that you would make as a
24
PROSPECTIVE JUROR: He wasn't at fault, it was
24 juror in this case based on the evidence that you hear and
25 a drunk driver who caused the wreck.
25 the instructions that the court would give regarding the
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173
law of the case?
and the other one was a former client, I got called by her
2
2 attorney to testify.
PROSPECTIVE JUROR: Uh-huh, totally different
3
3 thing.
4
MR. BECRAFT: Anybody else got a response to
MR. BECRAFT: Okay. Now, would your
4 experience -- we're going to have witnesses come up here.
5 that? I think Mr. Murphy asked this question, but I want
5 Can you lay aside any experience that you might have, good
6 to make abundantly clear, I didn't know if it included all
6 or bad, about being a witness in this case and not have it
7 former jurors, but has anybody here been in any kind of
7 affect your verdict if you're chosen as a juror in this
8 case, be it federal court or state court as a juror in
8 case?
9 either a civil or criminal case or have sat on either a
9
10 state or federal grand jury? How about have any of you
10
MR. BECRAFT: Anybody else that I missed? A
11 ever been a witness in a case?
11 moment ago, you know, Judge McCalla, I guess it was a
12
12 question asked of us, how much are we going to tell you
Ms. Stewart, and you were called as a party to
13 testify?
13 about our defense. Well, I'm going to tell you this:
14
14 We're probably going to go through this case and maybe
PROSPECTIVE JUROR: I was called as a witness
15 to testify.
15 there's going to be a lot of stipulations regarding the
16
16 government's evidence. Hopefully, maybe tomorrow
MR. BECRAFT: All right. And did you give
17 testimony in court?
17 afternoon or maybe sometime Wednesday morning, we will be
18
PROSPECTIVE JUROR: I did.
18 through with the government's case. After that, Ms.
19
MR. BECRAFT: Civil case?
19 Kuglin is going to get up, and she is going to testify
20
20 from the stand. I have got a series of questions I would
21
MR. BECRAFT: Okay.
21 like to ask each of you. Is there anybody here that
22
PROSPECTIVE JUROR: Yes. Well, one was a
22 would, you know, hold something against you based on what
23 criminal contempt.
23 you already heard in this courtroom about Ms. Kuglin, if
24
MR. BECRAFT: Okay.
24 she gets up there and testifies in this case, is there
25
PROSPECTIVE JUROR: Following a jury verdict,
25 anybody that is going to be prejudiced against her? Is
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175
there anybody that is not going to give her due
into the detail, but she is going to give you the reasons
2 consideration for her testimony? Well, you have all
2 why she did what she did. You can kind of look over here,
3 heard -- you know something about the facts in this case,
3 you know, if we get around to opening statements today,
4 Judge McCalla read you the indictment. She is a FedEx
4 you know, I have got a bunch of books stacked up right
5 pilot. She makes good money. You heard what the figures
5 there, but, you know, she has got her reasons. Now, will
6 were, and they're not going to be disputed. You know,
6 all of you promise me that you will listen to her
7 there is somebody -- somebody from the government is going
7 testimony diligently and weigh it like you would any other
8 to come in here and add up the figures, we're going to
8 witness? You will listen to her reasons and give due
9 have somebody from FedEx that is going to come in here and
9 consideration? Is there anybody that is not going to do
10 say this is what she made every year, I have no doubt that
10 any of that?
11 what the indictment says was her gross for all these years
11
12 is accurate, you know, anywhere from a hundred and forty
12 regarding tax and specifically income tax? Ms. Stewart.
13 grand to maybe a hundred sixty or a hundred and seventy
13 And I guess your answer would be, well, at law school, I
14 grand a year. Now, those are very large figures, is there
14 had a course, and I think earlier you made some statement
15 anybody here in this case that is going to be, well, gee,
15 that you have given opinions regarding the tax law. So
16 you know, I'm not going -- she makes a lot more than I do.
16 you would know generally something about the issue of
17 Is there anybody here going to be kind of anti or opposed
17 income taxation from what any common lawyer would
18 to Ms. Kuglin because she happens to be a FedEx pilot that
18 understand, correct?
19 makes good money that lives down at the end of south Main
19
20 Street in Waterford condos? Nobody is going to be holding
20
MR. BECRAFT: All right. Now, with your legal
21 it against her because her station in life is above
21 background, can you lay aside -- can you just kind of
22 normal? Okay. Is that -- will all of you promise that
22 divorce yourself from everything that you know and come
23 you will not hold that against her?
23 into this case and just listen to the facts and then
24
24 listen to the instructions that are given by the court?
Now, the evidence in this case, what she -- I'm
25 going to generally summarize, I'm not going to get down
25
How many of you have ever studied anything
PROSPECTIVE JUROR: I can.
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177
MR. BECRAFT: You think that she should have
MR. BECRAFT: Okay. Now, one of the things I
2 will tell you is that, you know, in defense, Ms. Kuglin is
2 gone out and sought legal counsel?
3 going to give you her beliefs about the law. She has
3
4 certain beliefs, and what the court is going to do is, you
4 the law or you don't. I know how to do my taxes. I mean
5 know, when she starts testifying about that, I want to --
5 I'm 23, and I know you pay income taxes, and everybody
6 I want to make it plain and clear right now that that is
6 knows that.
7 not going to be an effort on Ms. Kuglin's part to try to
7
8 tell you what the law is. We acknowledge that at the end
8 specifically asking for is to at least be --
9 of the trial, Judge McCalla is going to tell you what the
9
THE COURT: Let me say one thing here.
10 law is.
10
MR. BECRAFT: Sure, Your Honor.
11
THE COURT: You know, and that's a wonderful
11
Now, there is obviously going to be a
PROSPECTIVE JUROR: I think you either break
MR. BECRAFT: Okay. Can you -- what I'm
12 difference of opinion. There's going to be a difference
12 example of extracting from our own experiences to say what
13 in the testimony and the instructions that the court
13 somebody else would do, and often in our lives that's a
14 gives. Now, can each of you look at this -- the facts in
14 useful way in which we do things, but in the criminal law,
15 this case, these beliefs about the law and make a
15 in the criminal law, it really does matter what the person
16 conclusion, well, I don't think that she had a criminal
16 thinks or at least it's supposed to, and you're supposed
17 intent; can each of you do that? Mr. Sciara?
17 to give that meaning. So that if -- if we didn't have a
18
18 tax case, let's say we didn't have a tax case, let's say
PROSPECTIVE JUROR: I'm not so sure that I can
19 do that, because if I was making that kind of money and
19 we had a particular -- different type cases, possession
20 didn't understand what I was supposed to be doing with my
20 with intent to distribute marijuana, and let's say
21 taxes, I would hire somebody to tell me how to do that.
21 somebody had a quantity of marijuana, you know, it's
22
22 illegal to have marijuana, it's illegal, but the charge is
MR. BECRAFT: Okay. So both of you think that
23 because she was a FedEx pilot making big bucks --
23 possession with the intent to distribute marijuana. Now,
24
24 you might possess marijuana for more than one reason than
25 is.
PROSPECTIVE JUROR: I don't care what her job
25 distribution. Distribution means to transfer to another
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179
person either with or without financial gain. You might
don't go for that.
2 have marijuana for personal use, that's a different
2
3 section of the code, and that's a different law. So a
3 different than that. It is probably -- I'm just saying
4 jury, every time they decide that question, the jury has
4 probably because I have some experience. It's probably
5 to decide did that person possess that quantity of drugs
5 going to be I believe for these reasons that I didn't have
6 with the intent to distribute it.
6 to file an income tax return. Let's say that you were not
7
7 for profit, they're not arguing that here, and that you
It's -- and so you can have it, right, but not
THE COURT: I think it's going to be a little
8 possess it with the intent to distribute it. I'm just
8 really didn't owe any taxes, and you believe you didn't
9 trying to make the point that you're going to be asked to
9 have to file a return, but you didn't file a return, it
10 decide what was in the defendant's mind, and the
10 turned out you were supposed to file a return, you might
11 government is going to make some arguments about the
11 come in and say I didn't know -- you know, I didn't think
12 evidence to try to show what was in the defendant's mind,
12 I owed any taxes, I didn't think I needed to file a
13 and the defendant, probably through counsel, is going to
13 return. So I mean -- and that would be a legitimate
14 make some arguments to show what is in the defendant's
14 argument to make, and you would have to examine the state
15 mind about the good faith defense on not filing. I'm a
15 of mind of that taxpayer to determine whether or not they
16 little concerned --
16 actually violated the law. Why don't we do this, why
17
17 don't we -- I was a little concerned about this discussion
PROSPECTIVE JUROR: I understand what you're
18 saying, Your Honor, I just -- I did not want to sit here
18 going too far there. Why don't we -- is it Sciara?
19 and pretend that I'm not having feelings like that.
19
PROSPECTIVE JUROR: Sciara.
20
20
THE COURT: Say it again, I'm going to write it
THE COURT: And there's nothing wrong with
21 down phonetically.
21 that.
22
PROSPECTIVE JUROR: I was trying to be honest
22
PROSPECTIVE JUROR: Phonetically, it would be
23 with you, without wasting this court's time or anybody's
23 S-H-I-R-A, Sciara.
24 time that I'm having a little bit of trouble, if we're
24
25 going to plead, I'm sorry, I didn't understand, because I
25 kids love the food at the restaurant.
THE COURT: By the way, I have eaten there. My
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181
THE COURT: I think I have got it there.
PROSPECTIVE JUROR: I'm not trying to cause
2 trouble, I'm just trying to be honest.
2
3
3 telling you --
THE COURT: Let's talk about it at side bar.
PROSPECTIVE JUROR: I apologize. I'm just
4 And the reason I interrupted you is we have to be careful
4
THE COURT: That's okay.
5 about what we say in front of everybody. If you will come
5
PROSPECTIVE JUROR: I work real hard and I pay
6 around to side bar, I'm going to ask you a few questions.
6 all my taxes.
7
7
THE COURT: I understand.
8 bench.)
8
PROSPECTIVE JUROR: This is probably not the
9
9 one for me.
THE COURT: I'm going to let you stand behind
10 the screen, that's sort of the protected place.
10
11
11 business out there?
PROSPECTIVE JUROR: I'm not trying to cause you
THE COURT: Do you -- do you own part of the
12 any trouble, I just have a hard time believing that
12
13 anybody that is old enough to have somebody -- I
13 business that we make, yes, sir.
14 understand she has got an older son, I mean we all know we
14
15 have to pay taxes. I find this hard to believe.
15 You can see you -- you go up to the counter, you're right
16
THE COURT: Right.
16 behind there?
17
PROSPECTIVE JUROR: Regardless of how much she
17
18 makes or where she works, I'm not being prejudiced that
18
THE COURT: Of course, you can see everybody
19 way.
19 pretty much?
20
THE COURT: I understand you completely, and
20
PROSPECTIVE JUROR: I get paid by some of the
THE COURT: Because I think I have seen you.
PROSPECTIVE JUROR: Yeah. And I will be the
21 this is not going to be about somebody -- it's going to be
21 fourth person in a month that has been called out of that
22 about -- the question is going to be did she have a good
22 little bitty business for jury duty too.
23 faith belief based on her understanding of the law that
23
THE COURT: That's --
24 she didn't have to file a return.
24
PROSPECTIVE JUROR: It's really breaking her
25
25 for me to be gone as well.
PROSPECTIVE JUROR: I can't help it, I'm sorry.
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183
THE COURT: I understand. Who owns the
be excused. Thank you very much.
2 business?
2
PROSPECTIVE JUROR: Sorry for your troubles.
3
3
4 jury duty all last week.
4
Mr. Stage, I'm going to let you come around for
5
THE COURT: I didn't know that.
5 just a moment.
6
PROSPECTIVE JUROR: We had two other people out
6
PROSPECTIVE JUROR: Alice Mantia, who was on
7 the week before and the week before.
7 bench.)
8
8
THE COURT: Hi, Mr. Stage, how are you doing?
9 unfair -- any questions from anybody?
9
PROSPECTIVE JUROR: Good.
10
PROSPECTIVE JUROR: I apologize.
10
THE COURT: It is important that people be
11
THE COURT: That's okay. I'll just -- I will
11 concerned about what the defendant was thinking and what
THE COURT: That may be in and of itself an
12 kid you about it when I come in and eat next time. I will
12 she really believed. Now, it has to be -- the belief has
13 let have you a seat over there, I will check with these
13 to be one that has some basis in -- it can't -- it can't
14 guys.
14 be a fantasy, but it merely has to be a good faith belief.
15
(The juror stepped away from the bench.)
15 It doesn't have to be right.
16
MR. BECRAFT: I think for cause.
16
17
THE COURT: I was afraid we were going to
17 together, it would be like me getting pulled over by an
18 officer, saying you know you were speeding and me saying I
18 get -19
PROSPECTIVE JUROR: The analogy you put
MR. MURPHY: Judge, I think this was a good
19 didn't know what the speed limit is, you're still going to
20 idea. I have no objection to a cause strike.
20 get the speeding ticket.
21
21
THE COURT: That's true.
22 understand what has happened.
22
PROSPECTIVE JUROR: I feel like there's a line
23
23 of the law, you either break it or you don't and --
THE COURT: Okay. He's a nice guy, and I
24 beliefs --
24 court.)
25
THE COURT: All right. We're going to let you
25
THE COURT: Well, in criminal -- remember, this
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185
is a criminal prosecution in a tax case. That doesn't
prove that. These are not W-2s, they're W-4s.
2 mean -- I'm not going to go on the civil side, that
2
3 doesn't mean they can't assess you, that doesn't mean that
3 turn in by April 15th.
4 they can't get their money, that doesn't mean that,
4
5 because that is different. I think that's all correct.
5 say --
6
MR. BECRAFT: Absolutely.
6
7
THE COURT: They can seize your house, they can
7 to put together, I just don't -- I guess because my state
PROSPECTIVE JUROR: Whatever you have got to
THE COURT: Do you see what I'm trying to
PROSPECTIVE JUROR: The analogy you're trying
8 put a tax lien on it, they can do all that stuff. And so
8 of mind isn't -- I see the law as the law. I mean you
9 it doesn't mean that a person is going to not have to pay,
9 either break it or you don't.
10 that's not the point. The point is, is it criminal
10
11 conduct because criminal conduct is different than, you
11 is that you have the necessary -- for a criminal
12 know, than, for example, city taxes, we all know we got to
12 conviction, not for the civil liability on your taxes, but
13 pay them.
13 for a criminal conviction, you have a right to make a bad
14
14 decision, you have a right to make a decision that is just
15
THE COURT: But when people don't pay them,
15 plain ultimately wrong, but if it is in good faith, if you
THE COURT: And one of the elements of the law
16 they don't put you in jail for it, they just take your
16 really believe that, you know, based on regulation or a
17 property. And that's -- see, that's fundamentally
17 statute or a code section or something else that you
18 different than putting you -- than having a potential
18 really don't have to pay it, then our government doesn't
19 criminal penalty.
19 want you to go -- to be criminally penalized for that.
20
20
21 y'all said what she was being charged with --
21
THE COURT: Now, they're still going to get
22
THE COURT: Sure.
22 your money because they're going to assess -- they're
23
PROSPECTIVE JUROR: -- y'all said she provided
23 going to put a lien on your property or something like
PROSPECTIVE JUROR: Another thing too, when
24 false W-4s, I mean --
24 that.
25
25
THE COURT: The government is going to try to
PROSPECTIVE JUROR: Well, I mean --
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187
PROSPECTIVE JUROR: I think I can be neutral.
THE COURT: That's a different thing.
2
MR. BECRAFT: Okay.
3 lot more believable to me if it wasn't for the false
3
PROSPECTIVE JUROR: But when I -- like I said,
4 documentation.
4 the story, if it makes sense to me that I see that, yeah,
5
THE COURT: We haven't heard any proof yet.
5 it could happen, if I put myself in a situation, yeah, I
6
PROSPECTIVE JUROR: Right. When I heard that,
6 might have been able to make a mistake like that, but
2
PROSPECTIVE JUROR: The story would have been a
7 that all of a sudden made me feel kind of fishy.
7 then, again, if I look at it and I say, well, there's no
8
8 way somebody could be that stupid, you know, then I look
THE COURT: I am going to let y'all ask any
9 questions that you want to ask.
9 at it differently and I say no.
10
MR. MURPHY: I don't have any questions.
10
11
MR. BECRAFT: Are you of the view that right
11 said, is that the way you feel right now?
MR. BECRAFT: Is that the -- what you just
12 now, you would not listen or give credence to anything she
12
PROSPECTIVE JUROR: Right now, honestly, I'm
13 had to say about justifications for why she did what she
13 leaning toward that I think there was no way it could have
14 did?
14 happened because of the false papers.
PROSPECTIVE JUROR: If I felt like you could --
15
MR. BECRAFT: Okay.
16 it would be a mistake that could have been made, yes, but
16
PROSPECTIVE JUROR: That's the only reason why,
17 if it sounded stupid to me, then there is no way you could
17 honestly.
18 make that mistake, no.
18
19
19 Honor.
15
MR. BECRAFT: You think there is no way she
MR. BECRAFT: Okay. Nothing further, Your
20 could make this mistake here?
20
MR. MURPHY: Nothing further, Your Honor.
21
21
THE COURT: We're going to let you have a seat
PROSPECTIVE JUROR: I haven't heard the story
22 yet, I got to hear -- I mean why she did it. If she says
22 right over there at that green chair.
23 I forgot --
23
(The juror stepped away from the bench.)
24
24
MR. BECRAFT: For cause.
25
THE COURT: I don't think we have any choice
MR. BECRAFT: My question is, are you so
25 prejudiced right now that you can't be neutral?
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189
THE COURT: And in this voir dire process,
here.
2
MR. MURPHY: I don't have any objection, Your
2 we're just trying to find people who haven't already made
3 Honor.
3 up their mind. You think some people have already made up
4
THE COURT: I hope we don't start a trend here.
4 their mind in this case?
5
MR. BECRAFT: Side bar fever.
5
6
6 probably.
7
7 court.)
8
THE COURT: Mr. Stage, we're going to let you
PROSPECTIVE JUROR: The ones who have left
THE COURT: Does it seem reasonable to want
8 people that are going to really wait and be patient?
9 be excused. Thank you.
9
PROSPECTIVE JUROR: Sure.
10
THE CLERK: Pam Stidham. Mozell Smith.
10
THE COURT: Are you that kind of person?
11
THE COURT: Let me get our first juror's last
11
PROSPECTIVE JUROR: I would like to think so.
12 name. Spell your last name for me.
12
THE COURT: Okay. What do you understand maybe
13
PROSPECTIVE JUROR: Stidham, S-T-I-D-H-A-M.
13 one of the big issues in the case is going to be?
14
THE COURT: Okay. Ms. Stidham, how are you
14
PROSPECTIVE JUROR: I guess just for us,
15 keeping an open mind and just really listening and hearing
15 today?
16
16 out what's being said and maybe learning, you know -- I
17
THE COURT: This whole process seems sort of
17 don't know.
18 strange?
18
THE COURT: Right. And one of the main
19
PROSPECTIVE JUROR: Not really.
19 questions we're going to have to decide is the defendant's
20
THE COURT: Not really?
20 state of mind, because I don't think they're going to sit
21
21 there and tell us that these returns were filed. They're
22
THE COURT: What do you understand our main
22 not going to say that. That is not going to be said, is
23 objective in this process is?
23 it?
24
24
25
THE COURT: In fact, they agree that didn't
PROSPECTIVE JUROR: Just to listen to the facts
25 and weigh the evidence.
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191
THE COURT: Okay. Now, tell us what part of
happen. They're not going to say, oh, no, I sent it in,
2 they just didn't get it. They're not saying that.
2 the district or city you're from.
3 They're not saying that I meant to send it in, they're not
3
PROSPECTIVE JUROR: I'm from Midtown.
4 saying that. They're saying that the defendant had a good
4
THE COURT: And what is your educational level?
5 faith belief that this was something she did not have to
5
PROSPECTIVE JUROR: Almost completed college.
6 do. And we are going to have to understand whether she
6
7 really believed that, and there's no mechanism that's
7 and who is your employer?
8 better use for this process than a jury because you folks
8
9 will be able to observe all the evidence that the
9 but I do some home renovation.
10 government puts on because the government is going to try
10
11 to address this question in its own proof, I'm sure,
11
12 right, Mr. Murphy? I think some of that is addressed by
12
13 the government.
13 occupation?
14
14
MR. MURPHY: Judge, I think if -- I can't say
PROSPECTIVE JUROR: I am mostly a homemaker,
PROSPECTIVE JUROR: His name is Greg Stidham,
15 for sure, but we have always got rebuttal, so --
15 and he is director of ICU at Le Bonheur.
16
THE COURT: Right, the government --
16
17
MR. MURPHY: In the total package, we will.
17 children?
18
THE COURT: No, I'm not saying the case in
18
THE COURT: Do you know -- do you have
PROSPECTIVE JUROR: He has two sons that are
19 chief, maybe I said that. The government will present
19 grown.
20 proof on that. The defense may -- the defense may present
20
21 proof on that, you're going to have to make up your mind.
22 Are you going to be able to be -- wait until you have
22
PROSPECTIVE JUROR: No, I don't.
23 heard everything and then make up your mind on this
23
24 question?
24
Ms. Smith, how are you?
25
25
PROSPECTIVE JUROR: Okay. And you?
PROSPECTIVE JUROR: Yes, I believe so.
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193
THE COURT: I'm going to let Ms. Smith be
THE COURT: I'm fine.
2
PROSPECTIVE JUROR: Good.
2 excused.
3
THE COURT: You made up your mind about this
3
THE CLERK: Lauren Smith.
4 case or are you still able to be open-minded about it?
4
THE COURT: Mr. Smith, how are you?
5
5
PROSPECTIVE JUROR: Fine. I'm fine.
6 about it, but I have personal reasons why I cannot serve.
6
7
7 reason you cannot serve on this jury and be fair and
PROSPECTIVE JUROR: Well, I can be open-minded
THE COURT: Well, let's talk about that at side
8 impartial?
8 bar.
9
9
10
THE COURT: Come on up and we will talk about
10 don't.
11
11 it.
12
PROSPECTIVE JUROR: Not at this time, no, I
12 are you from?
13 bench.)
13
PROSPECTIVE JUROR: I'm in southeast Memphis.
14
THE COURT: Yes, sir.
14
15
PROSPECTIVE JUROR: My mother just got out of
15 background?
16 the hospital, and she had both of her legs amputated. I'm
16
PROSPECTIVE JUROR: Some college.
17 the caregiver. So I need to be home with her. And she
17
18 has doctor's appointments this week.
18 your employer?
19
THE COURT: Any objection?
19
20
20 internet technology.
21
MR. BECRAFT: No.
21
22
THE COURT: Thanks for letting us know.
22 fact that in this case, the defendant is a FedEx pilot?
23
23
PROSPECTIVE JUROR: No, I don't.
24
24
THE COURT: You have never met her, I assume?
25
PROSPECTIVE JUROR: No, I haven't.
25 court.)
PROSPECTIVE JUROR: FedEx is my employer and in
THE COURT: Do you have any problem with the
196
195
THE COURT: Okay. Do you -- are you married?
2
PROSPECTIVE JUROR: No, I'm single.
2
MR. MURPHY: Do you know any of the parties in
3
THE COURT: How old are you?
3 the courtroom, any of the people in the courtroom?
4
PROSPECTIVE JUROR: Forty-nine.
4
5
THE COURT: Forty-nine, okay. Do you know of
5 side).
PROSPECTIVE JUROR: (Shakes head from side to
6 any reason again that you could not sit on this jury and
6
7 be fair and impartial?
7 federal government?
8
8
9 any reason.
9
10
10
MR. MURPHY: Do you have any strong opinions
11
MR. MURPHY: Yes, sir, Your Honor. I know
11 about the income tax laws, for example, do you think that
PROSPECTIVE JUROR: No, I don't. I don't have
MR. MURPHY: Any family members work for the
12 these people down in front are sitting here, well, is he
12 income tax is unconstitutional and the government ought
13 going to ask all these questions again. To the two recent
13 not to be able to impose taxes on people? I'm getting a
14 jurors seated, have you ever had any problems with the
14 look.
15 IRS, any tax problems?
15
16
16 government has the right to levy taxes on you, sure
17
17 enough; however, from a recent experience, I know that the
18
MR. MURPHY: The judge is going to instruct you
18 government taxed me at a different rate and I didn't think
PROSPECTIVE JUROR: Well, I think that
19 what the law you're to apply in this case is, you got any
19 it was fair. My job gave me a bonus, and if they had just
20 problem following that?
20 taxed me at the same rate as my normal salary, that would
21
21 have been fine, but they want to tax me at a higher rate.
22
MR. MURPHY: Even if you don't like the law,
22 For what? I mean why? You still have to pay the taxes,
23 you think it is crazy, are you going to go back there and
23 but why do it on a bonus.
24 say I'm not going to do this, this is foolish? No matter
24
25 what you think, are you going to be able to apply the law?
25 is that -- has that made -- is it going to be difficult
MR. MURPHY: Okay. But, now, that experience,
198
197
for you to be a fair juror in this case?
witness in a case?
2
PROSPECTIVE JUROR: No, it won't make me.
2
3
MR. MURPHY: In other words, are you going to
3
4 be able to set all of that said and not say I'm going to
4
MR. BECRAFT: Gone into court and testified?
5 equal things up with the IRS?
5 Been a juror, civil, criminal, grand jury?
6
6
7
MR. MURPHY: Okay. Last question and I'm going
7 side).
8 to sit down. Is there anything that I haven't talked
8
MR. BECRAFT: Been a party to a case?
9 about that y'all need to tell us about, anything you think
9
10 we might want to know? Okay. Thank you.
10 side).
11
11
MR. BECRAFT: We're to our new jurors here,
12 let's bring you up to speed. Do either one of you have
12 side).
13 any friends, family members that work for the federal or
13
14 state government in any capacity?
14 to speed, let's get back to the other questions. Y'all
15
15 seen some fireworks in this courtroom. Do you see some
16
MR. BECRAFT: Have either of you worked for any
16 people that have got emotional opinions about taxes? Will
MR. BECRAFT: I think that brings them all up
17 type of government before?
17 each of you listen to what Vernie Kuglin has to say as the
18
18 reasons why she did what she did? The court told you a
19
PROSPECTIVE JUROR: I was in the Navy for eight
19 minute ago that that is called a good faith defense, and I
20 will go a little bit further without getting into the
20 years.
21
MR. BECRAFT: That's good enough. That's your
21 details, but, you know, Vernie Kuglin studied this big,
22 only experience?
22 big book known as the Internal Revenue Code. She read it.
23
23 Now, she reaches a conclusion about that. She is going to
PROSPECTIVE JUROR: Yes. Well, I worked for
24 the Defense Depot for awhile.
24 get up there and tell you what she read and studied. Now,
25
25 my question to you is, if you listen to her testimony and
MR. BECRAFT: Have either of you ever been a
200
199
reach the conclusion that she really believed this, right
let Ms. Stewart go. Thank you for being here, Ms.
2 or wrong, will you give her testimony credence? Will you
2 Stewart. And, Ms. Saulsberry, we're going to let you be
3 consider her testimony in making the decision that you do
3 excused and, Ms. Straughter, we're going to let you be
4 in this particular case? Anybody that can't do that?
4 excused and Mr. Phillip Smith. So we have part of the
5 That's all I'm asking for.
5 rest of the panel. I'm going to ask Mr. Shaneyfelt to go
6
Nothing further, Your Honor.
6 to seat number eight because actually that's the first --
7
THE COURT: All right. If you'll fill out your
7 that's the next regular juror seat, and then Ms. Stidham
8 strike sheets and pass them up, or at least fold one over
8 will go to seat number nine and Mr. Inderbitzen to seat
9 and pass it up.
9 number ten. Those are actually permanent seats. We're
10
(Strike sheets were handed to the judge.)
10 going to call five more jurors to take seats -- the last
11
THE COURT: You may come to side bar.
11 seat, seat seven and then the remaining 11, 12, 13, 14.
12
12
THE CLERK: Kim Stout. Sharon Smith. Joseph
13 bench.)
13 Schingle. Cynthia Street. George Stewart.
14
14
THE COURT: Ms. Stout, how are you doing?
15 one person, Lauren Smith, in seat 13. The defense struck
15
PROSPECTIVE JUROR: I'm doing fine. Thank you.
16 four. Defense struck Jurors Phillip Smith, Rose
16
THE COURT: All right. What part of the city
17 Saulsbury, Freida Straughter and Ms. Stewart, the
17 or the district do you live in?
18 attorney. So any objections?
18
PROSPECTIVE JUROR: I live in Cordova.
19
19
20
MR. BECRAFT: No, sir, Your Honor.
20 background?
21
21
PROSPECTIVE JUROR: College graduate.
22
THE COURT: All right. The government struck
22 court.)
23
THE COURT: All right. I hope you're not
23 your employer?
24 disappointed if you're excused. We're going to let Mr.
24
PROSPECTIVE JUROR: I'm at home right now.
25 Smith go, Lauren Smith, thanks very much. We're going to
25
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201
PROSPECTIVE JUROR: I can.
2
2
THE COURT: If you would hand that back to Mr.
3 occupation?
3 George Stewart who is right behind you. Mr. Stewart, how
4
4 are you today?
PROSPECTIVE JUROR: His name is Eric Stout, and
5 he's an electrician.
5
PROSPECTIVE JUROR: I'm doing pretty good. And
6
6 you, sir?
7
PROSPECTIVE JUROR: I do.
7
THE COURT: I'm fine.
8
THE COURT: And tell me --
8
PROSPECTIVE JUROR: Great.
9
PROSPECTIVE JUROR: Two. I'm sorry, three of
9
10 my own and two step.
10 are you from?
11
11
PROSPECTIVE JUROR: I live in north Memphis.
12
THE COURT: Okay. All right. It must be a new
12 one?
13
PROSPECTIVE JUROR: It is. He's five.
13 background?
14
THE COURT: Fairly new?
14
15
PROSPECTIVE JUROR: Fairly new.
15 science degree from the University of Memphis and a
16
16 medical technology degree from the University of
PROSPECTIVE JUROR: I have a bachelor of
17 Tennessee.
18 and impartial?
18
19
PROSPECTIVE JUROR: I do not.
19 your employer?
20
THE COURT: You've heard the discussion about
20
PROSPECTIVE JUROR: I'm a medical technologist
21 people's ability to wait and decide about a person's state
21 with Baptist Memorial Health Care.
22 of mind, that is what they believed and didn't believe.
22
THE COURT: And are you married?
23
23
PROSPECTIVE JUROR: No, I'm not.
24
THE COURT: And some people have found that
24
25 difficult to do. Can you do that?
204
203
THE COURT: You work for MLG&W?
PROSPECTIVE JUROR: No. I can be fair and
2 impartial.
2
3
3
THE COURT: We will let you be excused if you
THE COURT: All right. I've asked everybody --
4 lately, we're asking everybody that question to make sure
4 want to be.
5 they haven't already made up their mind, it kind of
5
PROSPECTIVE JUROR: Please.
6 sounded like some folks had. Are you able to -- the key
6
THE COURT: Come on around and talk to us. If
7 question here is going to be -- probably, I never can be
7 you have been working that much, we may need to let you
8 sure, I will tell you at the end of the case what some of
8 go.
9 those questions are, but it may be what Ms. Kuglin
9
10 thought, I mean what was in her mind, whether she had a
10 bench.)
11 good faith belief about certain things, and that's just
11
12 going to obviously wait until the end of the case and then
12 we better just come around here. What is your job at
13 you'll have to make a decision on that. But can you wait
13 MLG&W?
14 on that and not jump to a conclusion in this case?
14
15
15 have to make sure all the crews get what they need when
16
THE COURT: Okay. I'm going to ask you to hand
16 they need it.
THE COURT: I know you're tired, so I thought
PROSPECTIVE JUROR: I'm a material handler. I
17 that to Ms. Street. Ms. Street, how are you?
17
18
18 working very long hours.
PROSPECTIVE JUROR: I'm tired, sleepy and
THE COURT: Okay. And I know they have been
19 stressed.
19
20
20 days, I think this is the 13th day.
THE COURT: What do you think about me? At
PROSPECTIVE JUROR: Yeah, 20. Twelve straight
21 least, you were out there resting, right? Not so bad.
21
22 I'm going to let you stand up so we can hear you okay.
22 were out until last night. My lights were out until last
23 You feeling all right, just tired?
23 night.
24
24
PROSPECTIVE JUROR: Just tired and sleepy, I
25 been working 12 to 16 hours a day to keep your lights on.
THE COURT: It's the 13th day because my lights
PROSPECTIVE JUROR: Mine didn't come on until
25 Saturday.
206
205
THE COURT: They have been working really long
Ford, Olive Branch.
2 hours, I would be hesitant to -- it might be hard for you
2
THE COURT: Are you a sales person?
3 to concentrate and stay awake to do this. We appreciate
3
4 it, we're going to let you be excused.
4
THE COURT: Okay. Is it cheaper in Mississippi
5
5 to buy a car?
6
6
PROSPECTIVE JUROR: Taxes are.
7
THE COURT: Taxes are less, okay. All right.
7 court.)
8
THE COURT: We're going to let Ms. Street be
8 Well, are you married?
9 excused. They have been working long, long hours.
9
PROSPECTIVE JUROR: Separated.
10
10
THE COURT: What's his name and what didn't he
All right. We're going to call a name to take
11 seat 13.
11 do -- what does he do?
12
THE CLERK: Cynthia Sanders.
12
13
THE COURT: Hi, Ms. Sanders. How are you
13 but his name is Booker Sanders, Jr., and he's a manager at
PROSPECTIVE JUROR: Well, there are many names,
14 Firestone.
14 doing?
15
15
16
THE COURT: I'm going to ask you a couple of
16
PROSPECTIVE JUROR: Two.
17 questions. If you will stand, I'm going to ask you what
17
18 you part of the district or city are you from.
19
PROSPECTIVE JUROR: Kirby and Mt. Moriah.
19
PROSPECTIVE JUROR: No, none whatsoever.
20
20
21 background?
21
And is it Mr. Schingle?
22
PROSPECTIVE JUROR: College.
22
23
23
THE COURT: How are you today?
24 your employer?
24
PROSPECTIVE JUROR: Fine, thank you.
25
25
THE COURT: It has been awfully long, and I
PROSPECTIVE JUROR: Car sales, Homer Skelton
208
207
THE COURT: We would love to have you, I just
apologize.
2
PROSPECTIVE JUROR: It has.
2 wanted to make sure you knew. Are you married?
3
THE COURT: It sort of depends on the answers
3
4 we get, you know. What part --
4
THE COURT: Your wife's name?
5
PROSPECTIVE JUROR: Cordova.
5
PROSPECTIVE JUROR: Verne Joan.
6
THE COURT: What?
6
THE COURT: And her occupation?
7
PROSPECTIVE JUROR: Cordova.
7
PROSPECTIVE JUROR: Me.
8
8
THE COURT: Trying to keep you around. All
9 background?
9 right. A lot of discussion here about people being able
10
PROSPECTIVE JUROR: Two years of college.
10 to listen to the law, the theories in the case and not
11
11 just make up their mind based on the charges. And in our
12 your employer?
12 system -- in a criminal law system, not civil side, we're
13
PROSPECTIVE JUROR: Retired.
13 not talking about civil side, civil liability is not the
14
THE COURT: What did you retire from?
14 question here, there has to be the requisite state of mind
15
PROSPECTIVE JUROR: New York Life Insurance
15 in order for someone to be subjected to criminal
16 Company.
16 liability, you know, totally different from the civil side
17
THE COURT: How long have you been retired?
17 as you're aware of from your business in the past, I'm
18
PROSPECTIVE JUROR: Eleven years.
18 sure. Can you do that in this case or are you starting
19
THE COURT: How old are you?
19 out with a couple of black marks already on the slate for
20
PROSPECTIVE JUROR: Seventy-three.
20 the defendant?
21
THE COURT: You know you're eligible to be
21
PROSPECTIVE JUROR: Clean slate.
22 excused?
22
THE COURT: All right. Well, then you don't
23
PROSPECTIVE JUROR: Yes, yes.
23 know of anything that would preclude you from being fair
24
THE COURT: Do you mind serving?
24 and impartial in this case?
25
PROSPECTIVE JUROR: I love it.
25
210
209
THE COURT: If you will hand that to Ms. Sharon
approach the bench.
2 Smith. Ms. Sharon Smith?
2
THE COURT: Sure, come on around.
3
3
4
THE COURT: I have got so many Smiths, I have
4 bench.)
5 to check and make sure I have got the right one.
5
THE COURT: Yes, sir.
6
6
PROSPECTIVE JUROR: I have family medical
7
THE COURT: Okay. What part of the district or
7 issues. My dad is 76 years old, lives in Crump,
8 city are you from?
8 Tennessee. He has diabetes, and three months ago, he had
9
PROSPECTIVE JUROR: Munford.
9 surgery and in the hospital to help the diabetes, it was
10
10 not successful, and they are taking off his foot today or
11 background?
11 tomorrow. I'm not at the doctor's office today to find
12
12 out which day it is, but I don't think my focus can be up
PROSPECTIVE JUROR: I have two years of
13 college.
13 here.
14
14
THE COURT: Sure.
15 your employer?
15
MR. MURPHY: Judge, no objection.
16
16
THE COURT: Thanks for letting us know, and I'm
PROSPECTIVE JUROR: I work for Lucite
17 International in customer service.
17 sorry we didn't get you let you go earlier.
18
18
19
PROSPECTIVE JUROR: Yes. My husband's name is
19 court.)
20 Tim. He is a mechanic at Lehman Roberts. And I have
20
21 three children.
21 excused, and call another name to take her place. I don't
22
22 usually do this, but I know how to do it. Neil Simpson.
THE COURT: Three children. Okay. Do you know
THE COURT: We're going to let Ms. Smith be
23 of any reason that you could not sit on this jury and be
23
Mr. Simpson, how are you doing today?
24 fair and impartial?
24
PROSPECTIVE JUROR: Very good, thank you.
25
25
THE COURT: Okay. This has taken a lot longer
PROSPECTIVE JUROR: Yes, I would like to
212
211
THE COURT: Three children?
than it sometimes takes. I suppose it's because of the
2 nature of the inquiry.
2
PROSPECTIVE JUROR: Thirteen grandchildren.
3
3
THE COURT: Thirteen grandchildren, all right.
What part of the district or city do you live
4 That's great. That's wonderful.
4 in?
5
PROSPECTIVE JUROR: East Memphis.
5
Do you know of any reason that you could not
6
6 sit on this jury and be fair and impartial?
7 background?
7
PROSPECTIVE JUROR: No reason.
8
PROSPECTIVE JUROR: One year of college.
8
THE COURT: Okay. We had that fundamental
9
9 question about some folks saying they already basically
10 your employer?
10 made up their mind, are you able to put yourself in that
11
11 category of people who are able to listen?
PROSPECTIVE JUROR: Retired, but -- retired
12 twice. MLGW, Methodist Hospital, back at MLGW.
12
PROSPECTIVE JUROR: Yes, sir, have to hear all
13
THE COURT: You're not back there now?
13 the facts.
14
PROSPECTIVE JUROR: As a contract, under
14
THE COURT: All right. Mr. Murphy. Thanks
15 contract. I have been working 14, 15 hours also.
15 very much.
16
THE COURT: You doing all right or do you --
16
17
PROSPECTIVE JUROR: I'm doing fine.
17
MR. MURPHY: Yes, sir, Your Honor. This is
18
THE COURT: You're doing fine?
18 directed to the new jurors. Have any of y'all had any
19
19 problems with the IRS? Audits or anything like that?
20
20
21
21 mic, I'm sorry. Mrs. Parker has to write it all down.
22
22
THE COURT: We're going to have to give you the
PROSPECTIVE JUROR: I had an audit years ago,
23 occupation?
23 but it doesn't affect my ability.
24
24
PROSPECTIVE JUROR: Marcie, home keeper, three
25 children.
MR. MURPHY: How was your experience with the
25 audit, good, bad?
214
213
THE COURT: The mic.
PROSPECTIVE JUROR: Well, it was -- I owed the
2 money, so I had to pay it.
2
3
3 the IRS.
MR. MURPHY: Okay. Do you think they treated
PROSPECTIVE JUROR: My sister-in-law works for
4 you fairly?
4
MR. MURPHY: Okay. Where does -- does she work
5
PROSPECTIVE JUROR: Yeah, it was fair.
5 at the service center?
6
MR. MURPHY: Thank you, sir.
6
7
Now, do y'all understand that you have got to
7 of Holmes Road, I'm not sure.
PROSPECTIVE JUROR: On -- I believe it's over
8 follow the law as the judge gives to it you? He's going
8
MR. MURPHY: Okay. On Getwell?
9 to tell you what the law is, that you have got to apply
9
PROSPECTIVE JUROR: Maybe that's it.
10 it. Does anybody have any problem with that? Do y'all
10
MR. MURPHY: Okay. The fact that you're a
11 have any problem with the fact that people are required to
11 juror in this case, have you -- if you have to vote one
12 pay income taxes, file tax returns, is that a problem?
12 way or the other, is it going to influence you because you
13
13 have a relative that works for IRS?
14
MR. MURPHY: See anything wrong with that?
14
PROSPECTIVE JUROR: No, definitely not.
15
15
MR. MURPHY: Okay. That's going to do it for
16
MR. MURPHY: All right. Is there anything you
16 me, ladies and gentlemen.
17 haven't told us that you think we ought to know about?
17
PROSPECTIVE JUROR: I have one.
18 You know -- I know a lot of times, we'll ask people
18
MR. MURPHY: Oh, yes, sir.
19 questions, and then later on somebody will raise their
19
PROSPECTIVE JUROR: I have a cousin that is
20 hand, you know, and I just remembered, I had, you know, an
20 retired from the IRS, but it wouldn't have any effect on
21 uncle in law enforcement that was, you know, years ago,
21 any of this.
22 anything like that? Any family, friends work for IRS,
22
MR. MURPHY: Presumably a cousin you like?
23 government, law enforcement?
23
PROSPECTIVE JUROR: Oh, yes.
24
24
MR. MURPHY: Okay. But you're not going to be
PROSPECTIVE JUROR: I have a sister-in-law that
25 works --
25 embarrassed if you vote one way or another?
216
215
PROSPECTIVE JUROR: Not at all.
this courthouse, if you were picked as a juror, if you
2
MR. MURPHY: Okay. Thank you, sir.
2 didn't see them at any time in between, would your
3
MR. BECRAFT: Let me pose these questions to
3 relationship with them, would it be such that if you sat
4 our new people up here. Do any of you have any friends,
4 in this case and made a certain decision and saw them this
5 close family members, yourselves ever worked for the state
5 weekend that you might have some problems with them?
6 or federal government in any way, shape, manner or form?
6
PROSPECTIVE JUROR: No, no.
7
PROSPECTIVE JUROR: Just this state.
7
MR. BECRAFT: Okay. So you can lay aside your
8
MR. BECRAFT: No, any state?
8 family connections with law enforcement and fairly and
9
PROSPECTIVE JUROR: My son is a judge in
9 impartially decide this case?
10 Colorado.
10
11
MR. BECRAFT: Okay.
11
MR. BECRAFT: Ms. Stout, did you say --
12
PROSPECTIVE JUROR: County judge.
12
PROSPECTIVE JUROR: I used to work for the
13
MR. BECRAFT: All right. Anybody else?
13 city.
14
PROSPECTIVE JUROR: I have two brothers that
14
MR. BECRAFT: Okay.
15 are police officers.
15
PROSPECTIVE JUROR: I am no longer employed
16
16 with the city. I used to work as a firefighter paramedic.
MR. BECRAFT: Where would they be police
17 officers?
17
18
18
19 police officer for the City of Memphis, and I have a
19
MR. BECRAFT: How about, have any of you ever
20 brother that is a security officer for the airport.
20 been a witness in a case, sat on a jury, state or federal?
21
21 Okay. Let's quickly go through them here, the three of
PROSPECTIVE JUROR: One of my brothers is a
MR. BECRAFT: All right. Do you see them on a
22 frequent occasion?
22 you.
23
PROSPECTIVE JUROR: Just ever so often.
23
24
MR. BECRAFT: All right. If we had this trial
24 with one of the local TV stations.
25 last through this weekend, as you finally walked out of
25
PROSPECTIVE JUROR: I was on a jury, civil case
MR. BECRAFT: Civil case, some years ago?
218
217
MR. BECRAFT: And y'all reached a verdict?
PROSPECTIVE JUROR: It has been about four
2 years ago.
2
3
3
MR. BECRAFT: Now, here you are a second time
MR. BECRAFT: Can you lay aside anything you
4 saw or learned then and come into this case and just
4 around sitting in a -- possibly sitting in another tax
5 listen to the facts and the evidence here and take the
5 evasion case. Will you promise if you're selected as a
6 judge's instructions on the law and decide it without
6 juror that anything you remember about that case will not
7 being influenced by your past jury service?
7 have an effect upon your decision if you're sitting as a
8
PROSPECTIVE JUROR: Sure.
8 juror here?
9
MR. BECRAFT: I'm going to ask the same
9
10 question of you, sir.
10
MR. BECRAFT: Okay. Is there anything -- you
11
11 know, here it is 5:00 o'clock, and I know y'all want to
PROSPECTIVE JUROR: Yeah, civil case,
12 automobile accident couple of three years ago.
12 get out of here, is there anything that anybody wants to
13
13 bring to our attention right now? We have asked a whole
MR. BECRAFT: Okay. And that wouldn't have any
14 influence on what you do here?
14 bunch of questions, and I don't want to have to repeat
15
15 them. Just volunteer something, is there something you
PROSPECTIVE JUROR: Not at all. Mine was in
16 federal court in '68. It was tax evasion --
16 need to tell us that we ought to know regarding your
17
MR. BECRAFT: It wouldn't have --
17 ability to sit as jurors?
18
PROSPECTIVE JUROR: Tax evasion case, it
18
Yes, sir.
19 wouldn't have anything to do with this.
19
PROSPECTIVE JUROR: My son is an employee at
20
20 FedEx.
THE COURT: I'm not certain I heard that
21 answer. Are you saying that you sat --
21
MR. BECRAFT: Okay.
22
22
23 tax evasion case in '68.
23
MR. BECRAFT: You have never met her?
24
MR. BECRAFT: '68, okay. Well, was that here?
24
25
25
MR. BECRAFT: Okay.
PROSPECTIVE JUROR: I sat on a case, it was a
220
219
THE COURT: You can fill out or at least turn
PROSPECTIVE JUROR: You asked about income tax,
2 I was a volunteer for our doing personal income taxes.
2 in a strike sheet and pass that up.
3
3
(Strike sheets were handed to the Judge.)
4
THE COURT: All right. Let me see counsel at
MR. BECRAFT: Did you ever study the income tax
4 laws?
5
PROSPECTIVE JUROR: Just what they give -- it's
5 side bar.
6 very basic for low and moderate income families.
6
7
7 bench.)
MR. BECRAFT: Your knowledge about filling out
8 tax returns, you can lay that aside, and just for this
8
9 case, you can listen to Judge McCalla, you know, listen to
9 what I'm going to do, though, is reseat them in the order
10 the facts and give -- take into consideration the law that
10 in which they're called. So our two alternates will be
11 he instructs you on and then make a decision in the jury
11 Ms. Sanders and Mr. Stewart, and Ms. Stout will actually
12 room without being influenced by your prior experience?
12 move around to seat 11. That's the way we seat them
13
13 because they're always in the sequence in which they're
PROSPECTIVE JUROR: Yes, ours was very simple,
14 called, and then I think we will just stop and come back
14 yes.
15
THE COURT: Okay. There were no strikes, so
MR. BECRAFT: Anything else? One final area I
15 tomorrow. But we will come back at 9:00. I want -- and
16 want to cover. You've heard me describe Vernie Kuglin.
16 y'all can come on in about five till because we have
17 You know her station in life. She has got these beliefs
17 cancelled everything else, and we have got an 8:30, but
18 about taxes. She studied the law. Now, can I get a
18 that will be over. It will be back there anyway.
19 promise out of y'all that y'all are going to listen to the
19
20 evidence fairly and not be prejudiced against her and not
20 court.)
21 hold anything against her and treat her like you would
21
22 anybody else, any other witness and treat her like you
22 jurors, but I have to reseat you a little bit because we
23 would like to be treated as well?
23 always seat you in the order in which you were called or
24
24 seated for jury selection. It's not actually -- it's --
25
MR. BECRAFT: Nothing further, Your Honor.
25 in other words, we always put -- the person in seat seven
THE COURT: Well, you're all accepted as
222
221
is the next juror. She is actually going to go to seat
service, and we do appreciate you being here, so I'm going
2 11, and Mr. Stewart is going to actually stay where he is
2 to let all of you go at this time, and thanks again very
3 and Ms. Sanders is going to move down. So it's a little
3 much. Thank you.
4 confusing. Ms. Sanders, we're going to evict you from
4
5 your seat, and we're going to move you down to seat number
5 tomorrow at 8:30. You will come back to the jury room,
6 seven, which is where Ms. Stout is sitting, and we're
6 which is this room immediately to my left and to your
7 going to have our two gentlemen in the middle, Mr. Simpson
7 right. Mr. Tuggle is going to show you to the jury room
8 and Mr. Schingle move over one seat, that is that way, and
8 in just a moment. Just take a look before you leave -- so
9 Ms. Stout is our juror in seat number 11. Sounds sort of
9 you will know what is in there. There are two restrooms,
10 mysterious, it is real important that we always do it the
10 coffee pot and that sort of thing. There will be a snack
11 same way, because it depends on who is going to be the
11 tomorrow, I hope. They're supposed to be here about 8:30,
12 actual members of the jury and who may be the alternates.
12 and then we will start in here very close to 9:00 o'clock.
13 This case is long enough -- I don't want anybody to get
13 We will start with a set of brief instructions, fairly
14 confused, there's no way to know if the alternates will
14 brief instructions so you will get some idea again of what
15 end up serving, but our alternates in this case are Ms.
15 the law is, and then we will go to opening statements, and
16 Sanders, she is our first alternate, and our second
16 we will proceed with the first witness. So that's going
17 alternate is Mr. Stewart, so you're the two alternates.
17 to be our sequence. Remember the places you're sitting in
18 And then everybody else is expected to be the jury in the
18 now because when you come back tomorrow, you will probably
19 case. You're the actual twelve jurors. It's not unusual
19 line up and come in in that order. Look at who is in
20 for us to have something -- hopefully, nothing happens,
20 front of you. Of course, if you're -- the person who will
21 but if somebody gets sick, this gives us the ability to
21 be in front will probably be Ms. Sanders tomorrow on the
22 replace -- that juror has a personal emergency, then that
22 first row. And then just remember the sequence that
23 gives us an ability to keep going.
23 everybody is in.
24
24
Now, that means that those of you who came and
25 didn't get to serve, this does qualify as your jury
Now, what we will have you do is come back
Now, seven things. Do not discuss the case
25 with anybody at all. That includes among yourselves.
224
223
That means when you go home this evening, don't talk about
there is anything in the newspaper about it, probably
2 the case. You know, oh, I'm on this interesting IRS case,
2 won't be, I mean, after all, but if there happened to be,
3 whatever you would say. Do not say that. Tell them, you
3 do not read it to check it out. And, of course, if
4 know, I'm on a criminal case in federal district court, I
4 there's anything on television or radio, but, of course,
5 can't talk about it now, but I'll be able to tell you
5 probably more central, if there's something about tax
6 about it when the case is over. And the case will be
6 evasion cases or something about things like that, while
7 over, you know, Thursday or Friday and I'll tell you about
7 you wouldn't be researching that, it would be an
8 it when it is over. As to anybody who might approach you
8 inappropriate thing to do too. Don't do anything that
9 to talk about the case, of course, report that promptly to
9 would provide you with information that might influence
10 one of our court security officers, a member of my staff
10 you. And the seventh thing is keep an open mind until you
11 or directly to me. It is inappropriate for anybody to
11 have heard all the evidence in the case, the final
12 talk with you about it, and we'll take the appropriate
12 arguments of counsel, the final instructions on the law,
13 steps. The fourth thing is that you'll want to avoid the
13 gone to the jury room, deliberated among yourselves and
14 lawyers and the parties in the case and, of course, don't
14 then make up your mind, and that's going to be about four
15 speak to them at all. Now, in that regard always be sure
15 days from now.
16 and wear your juror tag where it's visible. They're
16
17 probably going to remember you, but that's a real easy
17 be excused. Mr. Tuggle is going to show you out that way,
18 thing for them to see. And that helps us all, all the
18 and we will see you in -- be back there at 8:30 tomorrow
19 people in the building know that you're a juror. The
19 morning, we will start in here at 9:00 o'clock.
20 fifth thing is that you do know it is a 26 U. S. Code
20
(Jury out at 5:00 p.m.)
21 Section 7201 case, do not go home and get on your computer
21
THE COURT: Gentlemen, I think that's --
22 and look up information about that. It is frankly pretty
22 anything else we need to take up at this time?
23 easy nowadays, and we just remind you not to do any
23
24 investigation. Don't make any inquiry. Don't try to
24 Honor.
25 research it in any way. The next thing is, of course, if
25
Ladies and gentlemen, we're going to ask you to
MR. MURPHY: Not from the government, Your
THE COURT: From the defense? I want to make
226
225
sure that I have got down the -- the defense position
typed up and written and put in there, then somebody get
2 exactly, because you want a statement of your theory. And
2 me a typed version and make sure it is reasonably short.
3 Mr. Murphy, have you got a point on that, at all?
3
MR. BECRAFT: Okay.
4
4
5 state their theory.
5
6
6
(Court adjourned at 5:02 p.m.)
MR. MURPHY: Judge, I think they're entitled to
THE COURT: Oh, they are, I agree, I mean I
7 didn't know if you had --
7
8
8
MR. MURPHY: No, I don't have an objection to
9
9 it.
10
THE COURT: Let me make sure I have got the
10
11 exact theory statement --
11
12
12
MR. BECRAFT: Your Honor, I haven't articulated
13 a, quote, theory of defense. The only thing I really need
13
14 is, you know, legal points regarding my jury instructions,
14
15 and that has already been submitted. You know, there
15
16 might be one or two legal points that I want to bring up,
16
17 you know, as things develop, but I don't necessarily
17
18 need -- and I think it is something I can easily take up
18
19 in opening and closing stating our position.
19
20
THE COURT: Well, I know you asked to be able
20
21 to state your theory, and some people have me also insert
21
22 the theory in the instructions, and if you want me to do
22
23 that, you just have -- and you don't have to --
23
24
MR. BECRAFT: Yeah.
24
25
THE COURT: -- but if you actually want it
25
228
WESTERN DIVISION
)
Plaintiff,
)
)
VS.
)
)
)
VERNICE KUGLIN,
)
)
Defendant.
)
NO. 03-20111-Ml
AUGUST 5, 2003
VOLUME II
BRENDA PARKER
OFFICIAL REPORTER
APPEARANCES
209 LINCOLN STREET
230
229
WITNESS INDEX
WITNESS
PAGE LINE
MARY ANN OSBORNE
DANIEL JOSEPH HAUGHTON
DIRECT EXAMINATION
BY MR. MURPHY: ........................ 339 6
DIRECT EXAMINATION
CROSS EXAMINATION
BY MR. MURPHY: ........................ 267 6
BY MR. BECRAFT: ....................... 341 13
CROSS EXAMINATION
REDIRECT EXAMINATION
BY MR. BECRAFT: ....................... 282 19
BY MR. MURPHY: ........................ 343 14
BY MR. MURPHY: ........................ 312 17
KIMBERLY GILLUM
ISABELLE BAKER
DIRECT EXAMINATION
BY MR. MURPHY: ........................ 345 6
DIRECT EXAMINATION
CROSS EXAMINATION
BY MR. MURPHY: ........................ 316 6
BY MR. BECRAFT: ....................... 348 5
ELIZABETH EDWARDS
LEPORLEON PRUITT
DIRECT EXAMINATION
DIRECT EXAMINATION
BY MR. MURPHY: ........................ 319 6
BY MR. MURPHY: ........................ 351 6
CROSS EXAMINATION
CROSS EXAMINATION
BY MR. BECRAFT: ....................... 330 10
BY MR. BECRAFT: ....................... 358 20
BY MR. MURPHY: ........................ 332 2
KARLENE NUBY
ALEXANDER RIVERA
DIRECT EXAMINATION
BY MR. MURPHY: ........................ 364 6
DIRECT EXAMINATION
CROSS EXAMINATION
BY MR. MURPHY: ........................ 334 6
BY MR. BECRAFT: ....................... 367 1
CROSS EXAMINATION
BY MR. BECRAFT: ....................... 336 6
JEANNE GRIFFIS
DIRECT EXAMINATION
BY MR. MURPHY: ........................ 369 6
232
231
CROSS EXAMINATION
EXHIBIT INDEX
EXHIBIT NUMBER
PAGE LINE
Exhibit Number 1
Notes to Taxpayer - 1996
271
3
DIRECT EXAMINATION
Exhibit Number 2
Cert. of Lack of Record
271
22
BY MR. MURPHY: ........................ 373 6
Exhibit Number 3
1996 IRPTRO
273
16
CROSS EXAMINATION
Exhibit Number 4
1997 IRPTRO
274
10
BY MR. BECRAFT: ....................... 374 24
Exhibit Number 5
1998 IRPTRO
274
21
Exhibit Number 6
Information Returns
275
7
DIRECT EXAMINATION
Exhibit Number 7
2000 IRPTRO
275
18
BY MR. MURPHY: ........................ 382 6
Exhibit Number 8
2001 IRPTRO
276
3
CROSS EXAMINATION
Exhibit Number 9
1992 Certificate
277
4
BY MR. BECRAFT: ....................... 399 9
Exhibit Number 10
1993 Certificate
279
1
Exhibit Number 11
1994 Certificate
280
16
BY MR. MURPHY: ........................ 411 7
Exhibit Number 12
1995 Certificate
282
3
Exhibit Number 13
IMF Transcript
289
5
DIRECT EXAMINATION
Exhibit Number 13
Application
317
12
BY MR. BECRAFT: ....................... 419 6
Exhibit Number 14
W-2s
321
2
Exhibit Number 15
W-4s
325
24
Exhibit Number 16
FedEx Direct Deposit Entry
8
17
Exhibit Number 17
1995 Form W-4
331
21
Exhibit Number 18
W-2 Form
335
22
Exhibit Number 19
Mortgage Interest Summary
41
8
Exhibit Number 20
Mortgage Interest Payments
7
24
Exhibit Number 21
Statement of Accounts
353
10
BY MR. BECRAFT: ....................... 371 1
DAVID SCOBEY
DEBORAH WHITE
VERNICE KUGLIN
234
233
Exhibit Number 22
Application for Account
355
8
Exhibit Number 23
Mortgage Documents
365
23
Exhibit Number 24
Loan Documents
370
20
Exhibit Number 25
Chart
384
25
The trial of this case resumed on this date,
Exhibit Number 26
Chart
385
2
Tuesday, August 5, 2003, at 9:05 o'clock a.m., when and
Exhibit Number 27
Paper Copy of Charts
385
4
where evidence was introduced and proceedings were had as
Exhibit Number A
Document 6209
308
19
follows:
TUESDAY MORNING & AFTERNOON
AUGUST 5, 2003
____________
THE COURT: All right. We're ready, we'll
bring the jury in.
COURT SECURITY OFFICER: Yes, Your Honor.
(Jury in at 9:05 a.m.)
THE COURT: You can be seated. And, of course,
thank you very much. I'm sorry we're running a little
late. They came just as I was leaving to do some storm
work, so I had to stay a little bit, but we'll try to stay
on schedule.
Ladies and gentlemen, I told you that we would
swear you in this morning, so I'm going to have you stand,
all raise your right hand, Mrs. Saba is going to
administer the juror oath at this time.
THE CLERK: Do you and each of you solemnly
swear that you will well and truly try the issues herein
joined and render a true verdict according to the law, so
help you God?
PRELIMINARY INSTRUCTIONS BY THE COURT
236
235
THE JURY: I do.
owing to her by the United States of America for said
2
THE CLERK: You may be seated.
2 calendar year by failing to make an income tax return on
3
COURT SECURITY OFFICER: You are now the jury
3 or before April 15, 1998, as required by law, to any
4 in the case, and I'm going to take a few minutes to tell
4 proper officer of the Internal Revenue Service by failing
5 you about your duties as jurors and give you some
5 to pay the Internal Revenue Service said income tax, and
6 instructions to give you some guidance as to how to listen
6 by filing a false Form W-4 in 1997, in violation of Title
7 to the case. Now, at the end of the case, I will give you
7 26, United States Code, Section 7201. And you'll remember
8 more detailed instructions, and it is those instructions
8 that Count 1 is similar to a number of the counts. There
9 that you must rely upon in reaching your decision in the
9 are six counts all together. Count 2 is similar to most
10 case.
10 of the counts. Count 1 is just a little different, and a
11
This is a criminal case brought by the United
11 couple of the counts are different too in they make no
12 States government. The charges against the defendant are
12 reference to the Form W-4.
13 contained in the indictment. And we went over the
13
14 indictment at the very beginning of the case. I'm going
14 for the purpose of presenting information, it's not for
15 to read you Count 1 of the indictment because it is
15 the purpose of evidence at all.
16 somewhat typical -- actually, I'm going to read you -- let
16
17 me make sure. I'll read you Count 2. They're all pretty
17 a description of the charge made by the government against
18 much alike, there's a little bit of difference, and they
18 the defendant and, again, it's not evidence of anything.
19 do relate to different time periods. Count 2 says that
19 The defendant has pled not guilty to the charge
20 during the calendar year 1997, the defendant, Vernice B.
20 contained -- each charge contained in the indictment and
21 Kuglin, had and received taxable income in the sum of
21 is presumed innocent unless and until the government
22 approximately $147,999.60, that well knowing and believing
22 proves beyond a reasonable doubt that the defendant is
23 the foregoing facts, the defendant on or about April 15,
23 guilty. It will be your duty to decide from the evidence
24 1998, in the Western District of Tennessee, did willfully
24 to be presented whether the defendant is guilty or not
25 attempt to evade and defeat the said income tax due and
25 guilty of the crime charged. You will decide from the
Now, the indictment -- an indictment is just
In this case, the indictment is, as usual, just
238
237
evidence what the facts are, and your verdict will be
circumstances.
2 based on those facts. You are the sole judges of the
2
3 facts. You must then apply those facts to the law which I
3 be proved, the government must establish beyond a
4 shall give you, and in that way reach your verdict.
4 reasonable doubt each of the following elements:
5
5
You must follow the law whether you agree with
In order for the crime of income tax evasion to
First, that the defendant owed substantially
6 it or not, and you should not take anything that I may say
6 more federal income tax for the calendar year of which
7 or do during the trial as indicating what I think of the
7 they're charged in that count in the indictment than was
8 evidence or what I think your verdict should be. The law
8 declared due on the income tax return, or if there was no
9 in this case is contained in 26 United States Code,
9 return filed, that it should have been contained in a
10 Section 7201, and that code section reads in relevant part
10 return filed.
11 as follows:
11
12
12 affirmative act constituting tax evasion described in the
Any person who willfully attempts in any manner
Second, that the defendant committed an
13 to evade or defeat any tax imposed by this title or the
13 indictment and that the defendant acted willfully.
14 payment thereof shall be guilty of a crime.
14
15
15 always has to prove in a tax evasion case is that the
The indictment in this case charges that the
Of course, the first thing the government
16 defendant in six separate counts violated from the period
16 defendant owed substantial federal income tax for the year
17 1996 to 2001, Section 7201 of Title 26 of the United
17 that's charged. The government doesn't have to prove the
18 States Code.
18 exact amount the defendant owed, nor does the government
19
19 have to prove all of the tax charged in the indictment or
The tax system or the system of tax collection
20 in the United States relies upon the honesty of taxpayers.
20 if a particular sum charged in the indictment is the
21 The government needs taxpayers to report timely,
21 precise sum. It's not an accounting question, it's a
22 completely and honestly all taxes they owe so that it can
22 question of whether or not there was a substantial act.
23 collect the taxes due. Congress, therefore, has made it a
23 So, of course, one of the things the government generally
24 criminal offense for a taxpayer to evade taxes, to file a
24 must prove beyond a reasonable doubt is that the defendant
25 false return or to file no return under certain
25 received substantial income in the year in which the taxes
240
239
were not paid and that tax was due on that income in the
were due. The government must, of course, establish this
2 year or the following year which the income was received.
2 type of affirmative element for each of the six counts in
3
3 the case.
In order to prove that the defendant received
4 substantial income which was not included in the return,
4
5 the government has to introduce evidence of income and the
5 is that the defendant acted knowingly and willfully, and
6 receipt of that income by the defendant.
6 it's in this context that we usually end up with a
7
7 discussion about whether someone had a good faith belief
If you find based on all the evidence that the
Now, the third thing the government has to show
8 government established beyond a reasonable doubt the
8 that they didn't have to pay the taxes. Now, first, they
9 defendant did receive substantial income during the tax
9 have to show that it was knowing and willfully. The
10 year in question that was not reported in which nothing
10 government has to prove beyond a reasonable doubt that the
11 was paid, then the first element of the offense can be
11 defendant knew that she owed substantial federal income
12 established. But, of course, if the government fails to
12 tax for the particular year that is charged that was
13 do that, then on that particular year, the element would
13 declared on any return or returns filed should have been
14 not be established.
14 declared on a return. Whether or not the defendant had
15
15 this knowledge is a question of fact that will have to be
The second element that the government must
16 prove as a general proposition is that the defendant --
16 determined by you on the basis of all the evidence.
17 and they must prove it beyond a reasonable doubt --
17
18 committed an affirmative act constituting tax evasion.
18 it is done purposely and deliberately and not because of
19 The Internal Revenue Code makes it a crime to attempt in
19 mistake, accident, negligence or other innocent reason.
20 any manner to evade or defeat any income tax imposed by
20
21 the law. There are different ways in which taxes may be
21 on all of this at the end of the case, but I anticipate
22 evaded, and in this case, the defendant -- the government
22 that the defendant will take the position that she has a
23 simply charges the defendant received a substantial
23 good faith belief that she did not have to pay or file the
24 income, and then, according to the government, willfully
24 income tax return. She didn't have to pay the taxes in
25 chose not to pay those taxes, knowing that those taxes
25 the respective year.
Of course, an act can be done knowingly only if
Now, I'll give you more detailed instructions
242
241
Well, that's a summary of the basic principles
A defendant does not act willfully, we just
2 talked about the willful element, if she believed in good
2 of law that you're going to have to be dealing with in
3 faith that her acts complied with the law. Therefore, if
3 this case.
4 the defendant actually believed that she was doing what
4
5 was in accordance with the tax statutes, she cannot be
5 are going to decide, obviously, and have to decide the
6 said to have the criminal intent to willfully evade taxes.
6 fundamental question of who you believe in this case and
7 Thus, if you find, after you have heard all the evidence
7 who you do not believe, or perhaps more clearly, you're
8 in the case, that the defendant honestly believed that she
8 going to have to decide the fundamental question of
9 owed no taxes, even if that belief was unreasonable or
9 whether you believe the defendant, whether you believe
10 irrational, then you should find her not guilty. However,
10 other proof that would suggest that you do not believe the
11 of course, you will be allowed to consider whether the
11 defendant had a good faith belief as to her not having to
12 defendant's belief was actually reasonable as a factor in
12 pay taxes under the statutes that govern the payment of
13 deciding whether she held that belief in good faith.
13 taxes. So you're going to have to decide who you believe
14
14 or who you don't believe in this case. How do you do
It should also be pointed out that neither the
Let me tell you a couple of other things. You
15 defendant's disagreement with the law nor her own
15 that? There are a couple of things you try to do,
16 belief -- nor her own belief that the law is
16 basically, usually. First of all, you observe the
17 unconstitutional, if she had that belief, no matter how
17 demeanor of each witness as that witness testifies,
18 earnestly that belief is held, constitutes a defense of
18 determine whether or not you believe what the witness has
19 good faith. It is, of course, the duty of all citizens to
19 to say in this case, determine whether or not the witness
20 obey the law regardless of whether or not they agree with
20 has previously said something different than what the
21 it. So -- and you'll get a copy of the -- of all of the
21 witness is saying who is before you in this case,
22 instructions on the elements, the concept of willfulness,
22 determine whether or not the testimony of the witness is
23 the concept of a good faith belief before you're required
23 different from the testimony of other witnesses that you
24 or asked to deliberate, and it will be a little more
24 do believe and, of course, use your common sense in
25 detailed than the one I have given you at this time.
25 evaluating whether or not the statement, the information
244
243
provided by each witness does appear to you to be a
all know that that's not necessarily accurate, people can
2 truthful statement on their part. Use the normal
2 make erroneous notations or you might not observe
3 observation skills that you have in your everyday walks of
3 something the same way that someone else does. Those
4 life. Obviously, you're going to make a determination on
4 notes are for your personal use, your personal use alone,
5 credibility in this case, and I will give you more
5 they're not in the evidence. And if you choose not to
6 detailed instructions again on that at the end of the
6 take notes or you don't have notes on a particular point,
7 case, but it is a common sense type of approach in which
7 you're to rely on your own recollection and the collective
8 you carefully observe the witnesses as they testify.
8 recollection of everybody else on the jury in determining
9
9 what occurred here in the courtroom and not on a set of
Let's talk about a couple of other things.
10 Note taking. Well, you have all got note pads, I think.
10 notes. So don't be overly influenced by somebody's note
11 You're allowed to take notes in the case, and I suggest
11 or the fact that somebody has some notes, they shouldn't
12 that you may want to keep a list of witnesses just so you
12 really talk about what are in their notes, but the fact
13 can remember everybody who testified. You may want to
13 that they have some notes in making a decision. It's your
14 make a couple of notes about what they say or do not say.
14 own observation, the observation of all of you, that is
15 But let me say this about notes: Don't let note taking
15 what counts in this case.
16 interfere with your observing witnesses. Don't get so
16
17 busy taking notes that you're not paying attention to the
17 detailed instructions. You will have a written set of
18 witness as each witness gives his or her testimony,
18 instructions. After I give you those instructions, which
19 because, of course, it's your observations about their
19 will be there to guide you, and it's those instructions
20 testimony that is going to be far more important. Your
20 that you should rely on in deciding the case.
21 notes are not evidence in the case. They're just there to
21
22 remind you individually of the testimony that you have
22 opening statement on behalf of the United States?
23 heard and the observations you made as the witness was
23
24 testifying. The notes aren't to be shared with others or
24
THE COURT: You may proceed.
25 used to say, well, it's in my notes, it must be true. We
25
At the end of the case, again, I'll give you
Mr. Murphy, are you ready to proceed with
OPENING STATEMENT BY MR. MURPHY
246
245
MR. MURPHY: Thank you, Your Honor.
evasion case. The indictment charges six counts of income
2
Good morning, ladies and gentlemen.
2 tax evasion. One for 1996, one for 1997, 1998, 1999, 2000
3
THE JURY: Good morning.
3 and 2001. In Counts 2 through 6, what's charged is the
4
MR. MURPHY: This is the part of the trial we
4 evasion was aided or -- not aided, but was involved by
5 call opening statements. Before I even say anything, I
5 filing of false W-4 forms and failure to file a return,
6 want to congratulate you, ladies and gentlemen. I know
6 failure to pay taxes. In Count 1, it's failure to pay
7 you're going to say why is Mr. Murphy congratulating us
7 taxes and failure to file a return.
8 for sitting as a juror on a tax case. It's not the most
8
9 exciting thing in the world.
9 show? I anticipate, ladies and gentlemen, that the proof
10
10 in this case is going to show that the defendant was
Well, you, ladies and gentlemen, are now
Now, what's the proof in this case going to
11 judges, you're judges of the facts in the case. Now, you
11 employed by Federal Express as a pilot, and that she filed
12 don't sit up on the bench, you're in the jury box, and you
12 income tax returns with the exception, I believe the proof
13 don't wear a robe, but you, ladies and gentlemen, listen
13 is going to be, one year from 1965 until 1992. She didn't
14 to the proof and make a decision based on the law that the
14 file any returns from '93 through 2001. The conduct
15 judge gives you. And I always start out by mentioning
15 that -- the years involved in this case, however, are '96
16 that to people because it's very important that you
16 through 2001.
17 listen. Even a case that it's a little more exciting in
17
18 terms of what we're talking about can be difficult to
18 substantial income in each of those years and that she had
19 listen to. So it is important that you listen, because
19 taxable income. Now, taxable income, the proof is going
20 the proof is what you're going to have to make your
20 to be, is that income that remains after you deduct
21 decision about. And I know a lot of times when you get
21 deductions, personal exemptions, that sort of thing and
22 back after lunch late in the day, it's difficult to
22 that that is what you're actually taxed on.
23 listen, and I know everybody will, but it's important that
23
24 you do.
24 proof is going to be that in 1996, the defendant had wages
25
25 of $183,408, that she had taxable income that year after
As the judge told you, this is an income tax
The proof is going to be that she received
I submit, ladies and gentlemen, and expect the
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247
As to 2001, I submit the proof is going to be
making deductions for mortgage interest and those sort of
2 things of $162,883, and that the tax due was approximately
2 that the defendant had wage income of $190,000
3 $47,000.
3 approximately in 2001, taxable income of $161,000, in
4
4 2001, tax due and owing of approximately $45,000.
As to 1997, I anticipate that the proof is
5 going to be that the defendant had wages totaling $172,674
5
6 from Federal Express, that she had taxable income that
6 with the defendant's W-4 filings. You will see W-4s, but
7 year of $147,999 and the tax due and owing was
7 the proof is going to be that that is where you claim your
8 approximately $42,000.
8 withholding exemptions. The defendant in 1988 submitted a
9
9 statement to Federal Express in which she claimed six
As to 1998, I anticipate the proof is going to
Now, the proof is also going to show a pattern
10 be that defendant received approximately a $168,000 in
10 withholding exemptions. I anticipate the proof is going
11 wages and disability insurance compensation, that she had
11 to be in 1990, she submitted a W-4 to Federal Express
12 total taxable income of approximately $137,000, and that
12 where she had ten exemptions. Then somewhere along 1996,
13 the tax due and owing for that year was $36,507.
13 1995, Federal Express stopped withholding income tax from
14
14 the defendant's wages, and that around that time, she
As to 1999, I anticipate the proof is going to
15 that the defendant had $172,428 in wages from FedEx, that
15 submitted the W-4 and -- where she claimed exemption.
16 her taxable income after making allowances for deductions
16
17 and exemptions -- okay, I forgot to turn that on this
17 forms, there's a line that says I claim exemption from
18 morning. Hopefully, I won't blow everybody out of their
18 withholding for the year, and I certify that I meet both
19 seats. Is that too loud for y'all?
19 the following conditions for exemption. Last year, I had
20
20 the right to a refund of all federal income tax withheld
Regarding tax year, 2000, I submit, ladies and
Now, the proof is going to be that on W-4
21 gentlemen, that the proof is going to be that the
21 because I had no tax liability, and this year I expect a
22 defendant had wages from Federal Express in the amount of
22 refund of all federal income tax withheld because I have
23 $191,000 approximately, taxable income that year of
23 no tax liability. If you meet both conditions, write
24 approximately $164,000, and tax due and owing of
24 exempt here, and there's a box for exempt.
25 approximately $47,000.
25
Then if you go down, there's a signature line
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that says, under penalties of perjury, I certify that I am
paycheck was deposited. There will also be proof that
2 entitled to the number of withholding allowances on this
2 because of some tax problems that Ms. Kuglin had that
3 certificate or I'm allowed to claim exempt status.
3 there were levies made against her and garnishments and
4 Employee signature of Ms. Kuglin, signed her name and
4 that she was sent notice of these. That is in sum what I
5 dated it in every case. And in every case except one, she
5 anticipate the proof is going to be, and the reason we do
6 added the language reserving all of my constitutional
6 this is because we're going to have several different
7 rights in this matter, to the perjury declaration where
7 witnesses. This isn't like television where you have one
8 you swear under the penalty of perjury that that is a
8 witness who can get up there and give you all the proof.
9 truthful statement.
9 I anticipate the government will have 14, 15 witnesses.
10
10 Most of it will go pretty quick, but this way we do this
The proof is also going to show again that once
11 that was submitted, Federal Express withheld no income
11 so you can understand there will be people coming that
12 tax. Further, there is going to be proof that no tax
12 will give proof about the mortgage interest, the agent
13 returns were filed by the defendant during this period,
13 will go through the tax computation, FedEx will come in
14 and that based on the agent's investigation, except for
14 and there will be proof about the wages paid.
15 the one year -- one year where a sum of 13 --
15
16 approximately $1300 was withheld from the Kemper Insurance
16 just want to urge you to listen to all the proof in this
17 checks, there was no other withholding and no tax payment.
17 case, because, remember, you're the judges, and it is
18 And further, the proof is going to be that during this
18 going to be up to you to decide whether the defendant did
19 period of time, Ms. Kuglin's check was deposited at the
19 evade taxes and did so knowingly and willfully. Thank
20 Federal Express Credit Union, and from '96 till -- at
20 you, ladies and gentlemen.
21 least there will be records from '96 to 2000, I anticipate
21
22 the proof is going to be that she would paid be by
22
23 electronic funds transfer, and most days that there was a
23
24 payday, Ms. Kuglin or someone would go down to the bank
24
25 and withdraw large sums of cash that same day as the
25
Ladies and gentlemen, I am just about done. I
OPENING STATEMENT BY MR. BECRAFT
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MR. BECRAFT: May it please the court -- I kind
you, I think you appreciated and understood the civic duty
2 of hate these microphones, anybody having any problem with
2 that was being imposed upon you and the need here in
3 me speaking too loud or are you having any problem hearing
3 America, particularly in reference to criminal cases, for
4 me?
4 us to call in our friends and neighbors, people from the
5
THE COURT: Have you got your mic on?
5 community and come in and decide a case that can't be
6
MR. BECRAFT: I thought I turned it on, Judge.
6 decided without your intervention.
7 I was looking for the red light to come on.
7
8
8 gentlemen, on this side of the room, we really appreciate
THE COURT: If you don't have it on, it's not
Now, let me just tell you, ladies and
9 through our system, and that way you can't be heard in the
9 what you have done.
10 clerk's office. And we need -- you know, that's --
10
11
11 is a criminal case, and I've -- you know, while he was
MR. BECRAFT: Somehow, the little -- how is
12 giving y'all instructions this morning, what I did is I
12 that?
13
You know, as Judge McCalla has told you, this
May it please the court, ladies and gentlemen
13 kind of sat down and listened to what he had to say, and I
14 of the jury, before I give you at this stage what lawyers
14 have written out, y'all can fault me for my handwriting,
15 call opening statement -- and in opening statement what we
15 but let me kind of summarize, if I can, what this case is
16 like to do is kind of give you a road map of what this
16 about. Here in America, you know, we have an indictment
17 case looks like. You know, I want to first express before
17 that comes out, it's a piece of paper or several pieces of
18 I get rolling this morning, something that everybody on
18 paper, and what they do is they make a formal accusation
19 this side of the courtroom believes. I think Judge
19 of the commission of a crime. Here in this case, what we
20 McCalla will agree with what I say, I know Mr. Murphy will
20 have is we have got an indictment, and I want to
21 agree with what I say Ms. Kuglin and Mr. Bernhoft. You
21 familiarize yourselves with what we're dealing with. As
22 know, yesterday when y'all came, we spent a whole day
22 you have been told before, Count 1 alleges that tax
23 picking the jury. A lot of you saw some of these other
23 evasion was committed in '96, Count 2 is in '97, Count 3
24 people get up, oh, you know, I got some problem, some of
24 is in '98, Count 4 is in '99, Count 5 is in 2000 and Count
25 those were real problems. But as to each and every one of
25 6 is in 2001. Tax evasion. What is that we're going to
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253
have to look at here? What are the elements, as Judge
purpose of opening statement is to give a road map as to
2 McCalla told you about earlier this morning? Well, you
2 what proof is anticipated -- what proof is anticipated by
3 know, lawyers take a look at statutes, and we sit there
3 the respective party, and that does not mean usually
4 and we kind of -- we divide them into what we call
4 having a detailed discussion of the elements, that sort of
5 elements. Elements are facts. What does the government
5 thing.
6 have to prove beyond a reasonable doubt that a crime
6
MR. BECRAFT: I understand.
7 that's charge in the indictment was committed. In this
7
THE COURT: It is more of a road map.
8 situation, as Judge McCalla told you a minute ago, I'm
8
MR. BECRAFT: I will move on, Your Honor.
9 kind of summarizing the fact or element that must be
9
10 proven was taxes were owed.
10 court.)
11
11
MR. MURPHY: Judge, can we approach for a
MR. BECRAFT: What I want to point out to you
12 second?
12 is what's important for this case, what y'all are going to
13
THE COURT: You may.
13 have to decide is primarily the criminal intent that Judge
14
14 McCalla told you what's in issue in this case,
15 bench.)
15 willfulness. That's that criminal intent I was telling
16
16 you about when we were picking the jury. The government
MR. MURPHY: Judge, I'm not trying to waylay
17 Mr. Becraft, but this is opening, not closing. And
17 is going to come in in this case and offer some proof and
18 talking about elements at this point --
18 you're going to find out most of it is probably not going
19
19 to be contested by the defense. The defense does not
MR. BECRAFT: I want to just talk about intent,
20 Your Honor, that is where I was headed, real quickly move
20 contest -- Vernie Kuglin does not contest the fact that
21 through some of the things about what is important in this
21 she worked for FedEx and she made good money. She's not
22 case, make admissions, tell the jury what this case is
22 going to contest all these other things that the
23 about, which is all criminal intent. That's where I'm
23 government is going to be talking about. These witnesses,
24 headed.
24 they're going to come up here and testify about how much
25
25 was made or how much interest was paid on mortgages and
THE COURT: As a general proposition, the
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everything else. Ladies and gentlemen, that's not the
in California, married him, and as a result of have union,
2 issue in this case, at least from the defense. What is in
2 they had a son by the name of Christopher. Unfortunately,
3 question is that criminal state of mind. Did Vernie
3 that marriage didn't work out and the parties were
4 Kuglin commit the crime of tax evasion with a criminal
4 divorced. So in the early '70s, you know Vernie Kuglin
5 intent? Did she act willfully?
5 has been a flight attendant, she had been married, she is
6
6 now divorced, she has got to support a young baby boy, and
Now, let me tell you about -- I think you need
7 to know something about who Vernie Kuglin is in order for
7 she does such things as become a librarian, she becomes a
8 you to make an assessment of her intent. I've never ask
8 book binder, she does other odds and ends, and I think one
9 her her date of birth, and I'm not going to, but her
9 of her jobs was she worked for Welfare, but ultimately
10 parents were missionaries, and they were missionaries to
10 while doing these jobs and raising her young son, she
11 Africa at some time in the past, and Vernie Kuglin was
11 determined that she had an interest in flying. So in the
12 born in Africa, but her parents were from Kansas. And
12 '70s, '75, '76, '77, '78, right around there, Vernie
13 after a certain number of years in the field, that family
13 Kuglin decided I want to become a pilot, and I think she
14 came back, and Vernie Kuglin enrolled in school in Kansas,
14 was living in Dallas at the time and took her first flying
15 and she ultimately, let's say, in the early '60s went to
15 lesson. After that, she became a flight instructor. By
16 college. The proof is going to be that she had enough
16 some time around 1980 or 1981, there was a company, I
17 high school credits to move without getting a degree
17 think, in Lafayette, Louisiana by the name of Royal
18 straight into college. She went a couple of years to
18 Airlines, and she became a corporate pilot for that
19 college in Kansas. Right after that, you know, she had,
19 company. By 1985, she did what most people wanted to do,
20 during the course of her teenage years and early college
20 hey, if you're a pilot and you want to get a job with one
21 years, she was doing things like waiting tables, being a
21 of the big commercial airlines. Well, ultimately, she did
22 waitress, but by the mid 60s, '65, 1966, she worked her
22 get a job in 1985 with FedEx. She moved to Memphis from,
23 way down to Dallas where she became a flight attendant for
23 I believe, Dallas or Louisiana, and she has lived here
24 Braniff Airlines. And after a couple of years of being a
24 ever since. By 1985, you know, if you take the trolly all
25 flight attendant for Braniff Airlines, she met a man out
25 the way down to Beale Street, there is Waterford condos
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down there. In 1989, she bought that apartment down
materials, an excise tax can't be imposed upon the right
2 there, or that condominium. What she does and what she
2 to earn a living. That's point number one. Point number
3 has done for most of her life is a FedEx pilot or at least
3 two, she has been through this Internal Revenue Code, and
4 since 1985. We all know what FedEx does, those pilots get
4 she thinks that those that are required to file an income
5 to the airport about -- you know, sometime in the evening,
5 tax returns are parties that are statutorily made liable
6 and while we're in bed, those FedEx pilots are flying all
6 for a income tax, and she has been unable to find such a
7 over the country delivering their cargo. And after they
7 provision in the code. And finally her third major belief
8 go from, say, like from Memphis to Dallas or San Francisco
8 is that, you know, let's call it the Paperwork Reduction
9 or Portland, then they come back. You know, it is early
9 Act argument. The government has got to assign OMB
10 morning when they get ready to go to bed, and they go to
10 control numbers to certain documents and regulations, and
11 bed, and then they get up and they do the same thing.
11 from her investigation of tax laws and other items, she
12 These are night people, and that's what Vernie Kuglin was
12 has reached the conclusion that, hey, this Form 1040
13 doing, and she was paid good money to be a pilot.
13 doesn't match up with what I see here. Why do I see Form
14
14 2555 entitled foreign earned income as what appears to her
As Mr. Murphy mentioned a minute ago, since the
15 early '60S probably, I don't know the exact date, perhaps
15 to be the form that should be required to be filed? All
16 the government can tell us, all the way up through the
16 of these are oddities, but they are important for Vernie
17 '90s Vernie Kuglin was like anybody else, she filed those
17 Kuglin.
18 federal income tax returns. But what changed her mind?
18
19 What caused her to think otherwise? Let me kind of give
19 me kind of summarize, if I can. In 1992, Vernie Kuglin is
20 you a road map of what her beliefs were. I have kind of
20 probably somebody that's apolitical. One evening, as she
21 summarized them in certain categories. If you can kind of
21 is kind of vacuuming around her condominium, she has got
22 look at this, I want to kind -- if you're like me, you
22 the TV on, and there she is listening to C-Span and there
23 know I want to kind of categorize these types of belief.
23 is a party convention, a political party convention on,
24 The first, she has a belief that, well, the federal income
24 the Libertarian party, and she didn't know anything it,
25 tax is an excise tax, and based upon her reading of
25 and she sat down to watch this Libertarian party
Now, how did she arrive at these beliefs? Let
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260
convention, these people debating, and she said, you know,
somehow some way, she will tell us, but this is a cassette
2 I'm kind of interested in this. As a result of seeing
2 series, constitutional convention by Walter Cronkyte, the
3 what she saw on TV, she contacted a man that lives here in
3 ratification debates, the Bill of Rights, the text to the
4 Memphis, Don Winfield, and as a result of them talking,
4 United States Constitution, she starts listening to stuff
5 ultimately Vernie Kuglin is becoming somebody who is
5 like this. She starts reading the Declaration of
6 extremely interested in the Libertarian party. She and
6 Independence. She reads, you know, publications that are
7 Mr. Winfield, they kind of go to little meetings around
7 put out, Freedom Daily. She reads books that she has
8 the state to fellow Libertarians. She goes to meetings in
8 never read before, things that explain politics, economics
9 other cities across America, and as she is getting into
9 and taxation. And this process of learning about the law
10 this study and comprehension and understanding of the
10 for her for the first time is very revealing. Ultimately,
11 message of the Libertarian party, she starts encountering
11 by some time in '92 or '93, she is beginning to engage in
12 and running across tax information. People in the
12 a real detailed study of the law, what she perceives to be
13 Libertarian party are saying, well, you know -- they're
13 the law. Now, I need to tell you before I get into the
14 talking about taxes. Well, as a result of the talking
14 details of this, I want to -- I made a promise to Judge
15 about taxes, you know, Vernie hears such things as people
15 McCalla earlier, and I make a promise to you now, you
16 saying, well, you know, it's voluntary. And Vernie checks
16 know, what is going to be important in this case is Ms.
17 that out, and, you know, she sees actual government
17 Kuglin's beliefs and whether or not you believe that they
18 documents, our tax system is based upon voluntary
18 were her firmly held beliefs. Now, her beliefs, you know,
19 compliance. That creates, you know, a view of the tax
19 when she gets up there on the stand, I want to you
20 laws that she has never seen before. She always thought
20 remember this one fact. When she says, well, I think this
21 it was mandatory. Now, the government is saying our
21 is the law or I believe that this is what the law is, I
22 remember system is based on voluntary compliance. Well,
22 want to tell you right now, and I'm going to bring this up
23 once she starts seeing these documents, she makes a
23 with one of the first series of questions I'm going to be
24 commitment I want to learn something about the federal
24 asking her, our position is that's what she says up there
25 income tax laws. One of the first things that she did is
25 are her beliefs about the law. Don't confuse it with what
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the court is going to tell you in the way of jury
case, so fundamentally important that that is the reason
2 instructions at the end of this case. But Ms. Kuglin has
2 why there's no state income tax here in Tennessee. So it
3 certain beliefs about the law. She studied the United
3 is logical from her viewpoint to draw a conclusion based
4 States Constitution, she found out that the Constitution
4 upon what she understands are court cases, and she reaches
5 authorizes Congress to impose two types of taxes. She did
5 the conclusion, well, hey, I can see how people are
6 kind of a study of the history of income taxation at the
6 talking about you may not owe the federal income tax. But
7 federal level. She learned that in 1895, you know, she
7 she doesn't stop there, she moves on and she does some
8 read some documents that she thought were decisions of the
8 other studying, what I call legal belief number two up
9 United States Supreme Court, a case called the Pollock
9 there on the screen. What she did is, as you can see, not
10 case that held bad income tax unconstitutional. She read
10 that we're going to be offering this into evidence, you
11 and studied stuff about the ratification of the 16th
11 can see that by July of 1994, Vernie Kuglin had ordered a
12 Amendment, the federal income tax amendment. She read a
12 copy of the Internal Revenue Code. Big thick book. She
13 case called the Brushaber case and reached the conclusion
13 reads some documents that come from the IRS that identify
14 that in a constitutional sense, the federal income tax is
14 the various laws that require you to file a return. So
15 an excise tax, point number one as I put up here. Now,
15 she said I'm going to study those laws, and she sits down
16 she didn't stop there. What is important for Vernie
16 and does it, and, you know, when she reads what she
17 Kuglin is in her mind she envisioned, well, the federal
17 believes to be Section 6001 of the Internal Revenue Code
18 income tax is a thing known as an excise tax. So what is
18 and 6011 of the Internal Revenue Code, she says that the
19 an excise tax? And so she started reading cases, and one
19 law for filing returns, it doesn't say something like
20 of the things that was real important for Vernie Kuglin
20 every American, it says something to the effect that every
21 was a case that she thought was the Tennessee -- the
21 person liable, without telling you who it is. So as a
22 Supreme Court case of 1960 called the Jack Cole against
22 result of looking at the law, Vernie Kuglin starts looking
23 McFarland, and she read that case, and it says an excise
23 around and trying to find am I liable for the federal
24 tax can't be used to tax the right to earn a living. And
24 income tax, and to make a long story short, she ultimately
25 she concludes that that is a very fundamentally important
25 goes through the income tax sections of that big thick
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264
book over there and reaches the conclusion, well, I only
is an ordinary American, and you can say that an ordinary
2 found one statute that makes anyone liable for the federal
2 American has a right to sit down and read what she
3 income tax, that's the only agent for nonresident aliens
3 understands to be the law, to read cases and draw
4 and foreign corporations, and I'm not a nonresident alien
4 conclusions, and so as a result of her studies, what
5 and I'm not a foreign corporation, and I'm not making
5 Vernie Kuglin did is that for '93, '94, '95 or
6 payments to nonresident aliens and foreign corporations.
6 thereabouts, you know, she is working at FedEx and she is
7 So she reaches the conclusion, hey, I don't have to file
7 having withholding from her wages, but by the fall of '95,
8 income tax returns. But then perhaps one of the final
8 she is committed to her position, she really believes that
9 things that kind of, you know, kind of solidified her
9 she is not required to file returns, she really believes
10 beliefs was this thing about the Paperwork Reduction Act.
10 that she is not subjected to withholding. She has a
11 She will explain what her beliefs are about this
11 meeting some time in 1995, one of the people that she met
12 particular law. You will hear OMB control numbers on
12 here in Memphis had a little problem with the IRS, and
13 forms. There are OMB control numbers on regulations. She
13 they go down to a meeting, and at this meeting, you know,
14 knows that under this particular law, a tax regulation has
14 where Vernie Kuglin gets to see the IRS inter -- dealing
15 to have an OMB control number. She knows or she believes
15 with somebody who is claimed to owe taxes, she starts
16 that Section one of the Internal Revenue Code is the
16 asking questions. And she learns that the IRS agents
17 section that imposes the tax. She knows that the
17 don't want to answer the questions, and so she is directed
18 regulation that corresponds to that is Treasury Regulation
18 to study the law, go to the law library or hire a lawyer.
19 1.1-1. Now, Vernie Kuglin took a publication that comes
19 So what does Vernie Kuglin do as a result of what the IRS
20 from the government and merely looked up to see what is
20 told her? Goes to the library, runs over there to Memphis
21 the form that applies to the tax imposed section of the
21 State, does studying. She runs into an organization that
22 Internal Revenue Code. And to her amazement, she came up
22 has lawyers on board. Ultimately, she gets those lawyers
23 with this Form 2555 entitled foreign earned income.
23 to do some things for her. She did what the IRS said do
24
24 as a result of this meeting. But then by the fall of
Now, ladies and gentlemen, you can't say that
25 Vernie Kuglin is a legal scholar, but you can say that she
25 1995, Vernie Kuglin -- I think she said she wrote a lot of
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this while she was flying, but she writes some letters to
somebody in the government had answered those questions.
2 the IRS, October of '95, November of '95. She has got a
2 So this case, ladies and gentlemen, let me tell you what
3 series of questions that she poses to the IRS, one of
3 it boils down to. I think that this is the redeeming
4 which is what law makes me liable for the federal income
4 thing of this case. Tax evasion is not committed by
5 tax and, therefore, required to file an income tax return.
5 reading the law and relying on the government. This,
6 She sends it to the IRS. Did she get a response? No. A
6 ladies and gentlemen, is acting in good faith. That's
7 month later, she sends another letter to the IRS. Does
7 what the evidence will show in this case. And that,
8 she get a response? No. Those are two letters that we're
8 ladies and gentlemen, is the reason why Vernie Kuglin is
9 going to offer into evidence here. Now, having not
9 not guilty. That concludes my remarks. I hope that we
10 received a reply from the government, Vernie Kuglin
10 can finish this case by sometime tomorrow afternoon.
11 decided that there's something to hide, and she started
11 Thank you.
12 implementing her beliefs, which are not something that's
12
13 drawn out of the thin air, but virtually everything that
13 witness.
14 she believes comes from the law or the government itself.
14
15 So by December 29th, December the 30th of 1995, Vernie
15
THE COURT: If you would stop right there and
16 Kuglin gets around to submitting to FedEx this document
16 raise your right hand at the podium. I'm going to let you
17 right here, which is the first exempt Form W-4 with a
17 get over to the microphone, thanks very much. Do you
18 bunch of attachments. Thereafter -- you know, the
18 swear that the testimony you are about to give in this
19 government is going to bring in somebody from FedEx, hey,
19 case will be the truth, the whole truth and nothing but
20 think Vernie Kuglin submitted this W-4 exempt. You bet.
20 the truth, so help you God?
21 Vernie Kuglin is a woman that has firmly held beliefs.
21
THE WITNESS: I do.
22 Those firmly held beliefs caused her to ask questions of
22
THE COURT: You may have a seat up here.
23 the IRS. Ultimately, she hired lawyers to ask these
23
24 questions of the IRS. You know what, ladies and
24
25 gentlemen? This whole problem could have been resolved if
25
THE COURT: Mr. Murphy, you may call your first
DIRECT - MARY ANN OSBORNE
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MARY ANN OSBORNE,
Q.
Ma'am, I passed you a document, would you tell me what
2 was thereupon called as a witness on behalf of the
2 that document is?
3 Plaintiff, and having been first duly sworn, was
3 A.
4 examined and testified as follows:
4 transcript, what we call a complete.
5
5 Q.
DIRECT EXAMINATION
This is a certified copy of the individual master file
Now, what information goes in an individual master file
6 BY MR. MURPHY:
6 transcript?
7 Q.
Would you state your name, please, ma'am?
7 A.
8 A.
Mary Ann Osborne.
8 all actions, transactions or anything taken or done to the
9 Q.
And who do you work for, Ms. Osborne?
9 taxpayer's account.
10 A.
I work for Internal Revenue Service.
10 Q.
11 Q.
And what do you for the Internal Revenue Service?
11 I passed to you, who was that for?
12 A.
My job title is court witness coordinator.
12 A.
Vernice Kuglin.
13 Q.
Okay. Are you also involved with -- you have got
13 Q.
Would you spell the first and last name?
14 knowledge of how the IRS keeps custody of documents?
14 A.
First name V-E-R-N-I-C-E. Last name K-U-G-L-I-N.
15 A.
15 Q.
And what was the social security number for that
Yes, sir, I represent the custodian of records, I do
The individual master file transcript is a record of
Okay. And that particular individual master file that
16 prepare, research and receive these documents and do prepare
16 taxpayer?
17 them for court.
17 A.
The social security number is 514-44-1724.
18 Q.
18 Q.
All right. Now, can you examine that document and tell
Okay.
19
MR. MURPHY: Your Honor, if I could approach.
19 us what years, if any, Ms. Kuglin has filed income taxes,
20
THE COURT: You may.
20 income tax returns, rather?
21
MR. MURPHY: We have already shown this to
21 A.
The first income tax return filed was in 1965. Let me
22 defense counsel.
22 back up just a little bit. The first document we have of
23
23 something being done to this account was in 1965.
MR. BECRAFT: May it please the court, for this
24 witness, there's not going to be any objection to the
24 Q.
Okay.
25 exhibits that Mr. Murphy offers.
25 A.
1966, 1967.
270
269
Q.
Now, '66 and '67, tax returns were filed?
2 A.
I'm assuming they were. Looking at this document, I
return.
2 Q.
Now, does that record indicate that there were any
3 cannot tell you for sure.
3 levies on any withholding monies?
4 Q.
Okay. Keep going.
4 A.
5 A.
There is nothing listed here for 1969, so there is
5 there was withholding credited to this account.
The 1993, the 1994 and the 1995 tax return show that
6 nothing documented for 1969. There was something done to this
6 Q.
Okay.
7 account in 1970, 1971, 1972, 1973, 1974, 1975, '76, '77, '78,
7 A.
The 1993 return shows that there were two payments made
8 '79, '80, '81, '82, '83, '84, '85, '86, '87, '88, '89, '90,
8 to these accounts, and if I'm correct, I think these were levy
9 '91, '92, '93.
9 payments.
10 Q.
Were tax returns filed in '93?
10 Q.
11 A.
Yes, there was.
11 the account?
12 Q.
Okay. Now, what kind of tax return was filed in '93?
12 A.
Yes, it would.
13 Was that a substitute return?
13 Q.
Does that record indicate that there were notices sent
14 A.
Yes, sir, it was a substitute return.
14 out to the taxpayer of some kind regarding the levies?
15 Q.
Okay. What is a substitute return?
15 A.
Yes, sir, it does.
16 A.
A substitute return is where enough data has been sent
16 Q.
Okay. Can you tell us the date that the notices were
Okay. And would a levy payment show up as a payment on
17 in to Internal Revenue Service by businesses, banks or
17 sent out?
18 whatever to enable them to assess tax on a tax return.
18 A.
19 Q.
Okay. And does the IRS file a substitute return?
19 to the taxpayer regarding the 1993 tax return. 6-15-1998, a
20 A.
The IRS does prepare the substitute return.
20 notice was sent out to the taxpayer regarding the 1994 return.
21 Q.
Okay. And how about '94, was a return filed?
21 6-15-1998, a notice was sent out to the taxpayer regarding the
22 A.
Yes, sir, there was. This was also a substitute
22 1995 return.
11-11-1996, what we call a stat notice 26 was sent out
23 return.
23 Q.
Okay. Thank you, ma'am.
24 Q.
Okay. Again, who prepares the substitute return?
24
25 A.
Internal Revenue Service prepares the substitute
25 request that that document be marked as Exhibit 1.
MR. MURPHY: Your Honor, at this time, we
272
271
THE COURT: Yes, it will be Exhibit 1 in the
2 case.
3
(Exhibit Number 1 was marked. Description:
A.
Yes, sir.
2 Q.
What is an IRP document?
3 A.
An IRP document is a document that is sent into the
4 Notes to Taxpayer - 1996.)
4 service center. It could be W-2 to '98, to '99. Same type of
5 Q.
5 information is reported to social security. This gives
Ma'am, I'm going to pass you another document. Can you
6 tell me what that document is?
6 information of income that was received and paid by the
7 A.
This document is certification of lack of record.
7 taxpayer.
8 Q.
And is that a document that you prepared?
8 Q.
Okay. And is this information compiled?
9 A.
Yes, sir, it is.
9 A.
Yes, it is.
10 Q.
And what does that document indicate?
10 Q.
And is it formatted in a form that's referred to by the
11 A.
This document indicates that there has been no record
11 IRS as an IRP?
12 of any return being filed by the taxpayer for 1996, 1997,
12 A.
Yes, sir.
13 1998, 1999, 2000 and 2001.
13 Q.
Okay. And would these documents -- these IRP documents
14 Q.
14 have, for example --
Thank you. So that would be based on your examination
15 of the IRS records, and there was no indication of any type of
15
16 return was filed?
16 Q.
What are the initials?
17 A.
17 A.
The command code that is used to pull this information
18
No type of return was filed for those years.
MR. MURPHY: Your Honor, at this time, we would
THE COURT: Would you spell the word IRP?
18 up is spelled IRPTRO.
19 ask that this record be introduced as Exhibit Number 2 in
19
20 the case.
20 Q.
When people shorthand it, they call it an IRP?
21
THE COURT: It will be Exhibit 2 in the case.
21 A.
Yes, we call it IRP, I-R-P.
22
22 Q.
Okay. Now, would these IRP documents show mortgage
23 Cert. of Lack of Record.)
23 payments that was made?
24 Q.
24 A.
Yes, it does.
25 Q.
Would it also show wage income?
Ma'am, are you familiar with some records that are
25 referred to in the IRS as IRP documents?
274
273
A.
Yes, it does.
Q.
And when you use the term tax year, would that be for
2 Q.
And interest income?
2 most individuals the calendar year?
3 A.
Yes, it does.
3 A.
Yes, sir, it would.
4 Q.
Ma'am, I'm going to pass to you a document. Can you
4 Q.
Okay. So it would run from January the 1st of '97 to
5 December 31st?
6 A.
6 A.
This is an information returns on-line transcript,
Yes, sir.
7 which is IRPTRO, for the taxpayer Vernice Kuglin, social
7
8 security number 514-44-1724.
8 marked as the next numbered exhibit.
9 Q.
And what year is that for?
9
THE COURT: Exhibit 4.
10 A.
This is for the tax year 1996.
10
11 Q.
Okay. And you -- this came from the IRS records?
11 1997 IRPTRO.)
12 A.
Yes, sir, it did.
12 Q.
13
MR. MURPHY: Your Honor, at this time we would
MR. MURPHY: Judge, if we could have this
Ma'am, I'm going to pass to you another document. Can
13 you tell me what that document is?
14 ask that this be marked as Exhibit 3 in the case.
14 A.
This document is also an information returns on-line
15
THE COURT: It Exhibit 3 in the case.
15 transcript, again IRPTRO for Vernice Kuglin, social security
16
16 number 514-44-1724 for the tax year 1998.
17 1996 IRPTRO.)
17
18 Q.
18 ask that this be admitted into evidence as the next
Ma'am, I'm going to pass another document to you.
MR. MURPHY: All right. At this time, we would
19 Excuse me. Can you tell us what that document is?
19 numbered exhibit.
20 A.
20
21 on-line transcript, again, IRPTRO, captioned Vernice Kuglin --
21
22 I'm sorry if I'm pronouncing the name.
22 1998 IRPTRO.)
23 Q.
I think it is Kuglin.
23 BY MR. MURPHY:
24 A.
Kuglin. Social security 514-44-1724 for the tax year
24 Q.
This document is also a transcript, information returns
25 1997.
25 tell me what this document is?
276
275
A.
This document is an information returns on-line
marked as the next numbered exhibit.
2 transcript, again, IRPTRO for Vernice Kuglin, social security
2
3
4
4 2001 IRPTRO.)
MR. MURPHY: Your Honor, we would ask that this
5 be marked as the next numbered exhibit.
5 Q.
Ma'am, I'm going to hand you another document, can you
6
THE COURT: It is Exhibit 6.
6 tell us what that document is?
7
7 A.
This is a certificate of assessments, payments and
8 Information Returns.)
8 other specified matters for a Form 1040, U. S. individual
9 Q.
9 income tax return captioned Vernice Kuglin, social security
Ma'am, I pass you another document, can you tell me
10 what that document is?
11 A.
11 Q.
Okay. What does that document indicate?
12 again, IRPTRO, for Vernice Kuglin, social security number
12 A.
This document indicates that a tax return was filed for
13 514-44-1724 for the tax year 2000.
13 1992, it shows the adjusted gross income, the taxable income,
14 Q.
14 the document locator number of the tax return filed, the
15
Thank you.
MR. MURPHY: Your Honor, we would ask that be
15 amount of tax that was assessed on this tax return, the
16 admitted as the next numbered exhibit.
16 withholding credit that was allowed this taxpayer and the
17
17 refund that was issued to the taxpayer.
18
18 Q.
Okay. What were those -- can you go through those
19 2000 IRPTRO.)
19 figures for us?
20 Q.
20 A.
Ma'am, I've handed to you another document, can you
Yes, I can. I'm showing that the adjusted gross income
21 for 1992 was $112,084. I'm showing of that amount the taxable
22 A.
22 income was $86,644. The tax on this return was $20,892 with a
23 again, IRPTRO for Vernice Kuglin, social security number
23 document locator number of 49221104650003, withholding credit
24 514-44-1724 for the tax year 2001.
24 of $22,228 with a refund to the taxpayer of $1,336.
25
25 Q.
MR. MURPHY: Your Honor, we would ask this be
Okay. Thank you.
278
277
MR. MURPHY: Your Honor, we would ask this
due and owing in that case?
2 record be made the next numbered exhibit.
2 A.
There's a balance due showing of zero on this account.
3
3 Q.
And what does that mean?
4
4 A.
It means that all the taxes due on this account had
5 1992 Certificate.)
5 been paid by levy or by withholding and that there is no
6 Q.
6 additional taxes due and no refund due the taxpayer at this
Ma'am, I'm going to pass to you another document. Can
7 you tell us what that document is?
7 time.
8 A.
8 Q.
For that year?
9 and other specified matters for Form 1040, U. S. individual
9 A.
For that specific year.
10 income tax return captioned Vernice B. Kuglin, social security
10 Q.
And does that document also indicate that there was any
11 contact with the taxpayer, any letters or anything like that
12 Q.
Okay. What does that document indicate?
12 sent to her, notices?
13 A.
This document indicates the adjusted gross income, the
13 A.
This document is a certificate of assessments, payments
Yes, sir. Delinquency notice was sent to the taxpayer
14 taxable income, the document locator number for the substitute
14 on 4-17-1995. Another delinquency notice was sent to the
15 for return. It also shows that two extensions were filed by
15 taxpayer on 6-12-95. Another delinquency notice was sent on
16 this taxpayer.
16 7-24-1995. Another delinquency notice was sent on 9-4-1995.
17 Q.
Now, what is an extension?
17 The statutory notice of balance due was sent to the taxpayer
18 A.
An extension is filed on or before April the 15th
18 on 9-9-1996, and a statutory notice of intent to levy was sent
19 asking for additional time to file your tax return by the
19 to the taxpayer on 9-30-1996. There are additional notices of
20 taxpayer.
20 balance due on this account of -- from 1997, '99, 2000, 2001
21 Q.
21 and 2002.
Okay. And does -- does that indicate that there were
22 levies made or assessments made against the withheld
22 Q.
Thank you, ma'am.
23 taxation -- tax money?
23
24 A.
Yes, sir, it does.
25 Q.
Okay. And at the end of the year, what was the balance
25
280
279
a fee, our collection cost of $16.
2 Q.
3 Q.
3 sent to the defendant regarding her tax situation?
Ma'am, I'm going to pass to you a document. Can you
Okay. Does that document indicate any notices were
4 A.
5 A.
5 balance due sent out on 11-24-1997, statutory notice with
This document is a certificate of assessment payments
Yes, sir, there was. There was a statutory notice of
6 and other specified matters for Form 1040 U. S. individual
6 intent to levy was sent out on 12-15-1997. There was another
7 income tax return captioned Vernice Kuglin, social security
7 statutory notice of balance due sent out on 4-6-1998.
8 number 514-44-1724, for the tax year 1994.
8 Q.
9 Q.
9 account?
Okay. Now, does that show that any -- that a
Okay. And there's a balance due and owing on that
10 substitute return was filed?
10 A.
Yes, sir, there is, there is a balance due of
11 A.
Yes, sir, it does.
11 $16,428.97.
12 Q.
Again, who makes out the substitute return?
12 Q.
13 A.
The Internal Revenue Service prepares the substitute
13
Thank you, ma'am.
MR. MURPHY: Your Honor, we would move this
14 for return.
14 document into evidence as the next numbered exhibit.
15 Q.
15
16 from Ms. Kuglin's pay?
16
17 A.
Yes, there was.
18 Q.
In what amount?
18 Q.
19 A.
Withholding credit of $22,218.
19 you take a look at that and tell us what it is?
20 Q.
Okay. Now, were assessments or levies made for that
20 A.
And that 1994 tax year, had there been taxes withheld
Ma'am, I'm going to show you one final document. Can
This is a certificate for assessment payments and other
21 tax year?
21 specified matters for Form 1040 U. S. individual tax return
22 A.
22 captioned Vernice Kuglin, social security number 514-44-1724,
Assessments were made for the tax year of -- well,
23 let's see, you have an estimated tax penalty for $395, you
23 for the tax year 1995.
24 have a filing penalty for $2,534. You have tax assessed of
24 Q.
25 $32,353. You have interest assessed for $3,348.97. You have
25 filed for '95?
Now, does it show any -- does it show a tax return was
282
281
A.
A substitute for return was filed for 1995.
marked as the next numbered exhibit.
2 Q.
Okay. And does it show any withholding?
2
3 A.
Yes, sir, it shows withholding of $24,311.
3
4 Q.
Okay. And what taxes were paid with that sort of
5 thing?
5 Q.
6 A.
6 living in Tennessee, where do they send their tax returns
No taxes were paid other than the withholding on the
Ma'am, for people -- if you can answer this, for people
7 account. There's estimated tax penalty assessed of 970.
7 into?
8 Excuse me, $970.
8 A.
Memphis.
9 Q.
Okay.
9 Q.
Okay. Is there an IRS Service Center here?
10 A.
There's a late filing penalty for $5,118. The tax
10 A.
Yes, sir, there is a service center here in Memphis.
11 assessment on the account was $44,783, and interest is
11
MR. MURPHY: One second, Your Honor.
12 assessed of $3,925.59.
12
Judge, we don't have any further questions for
13 Q.
13 Ms. Osborne.
Okay. Does that document indicate that any notices
14 were sent out to Ms. Kuglin?
14
THE COURT: Cross examination?
15 A.
15
MR. BECRAFT: Could I ask the court something
Yes, sir, there was. In 11-24-97, a statutory notice
16 of balance due was sent to the taxpayer. 12-15 of 1997, a
16 about morning break?
17 statutory notice of intent to levy was sent to the taxpayer.
17
THE COURT: It will be fairly soon.
18 Again, on 3-9-98, an additional notice of intent to levy was
18
CROSS EXAMINATION
19 sent to the taxpayer.
19 BY MR. BECRAFT:
20 Q.
Any other notices?
20 Q.
Good morning, Ms. Osborne.
21 A.
No, sir.
21 A.
Good morning.
22 Q.
And what is the balance due on that account?
22 Q.
How long have you worked for the Internal Revenue
23 A.
The balance on this account is $30,485.59.
23 Service?
24 Q.
Thank you, ma'am.
24 A.
25
I have worked for the Internal Revenue Service for
25 approximately 28 years.
CROSS - MARY ANN OSBORNE
284
283
Q.
Did you start out in the position that you're in now?
letters, answered questions concerning these accounts, tried
2 A.
No, sir, I did not.
2 to explain a little bit about the accounts. I have also
3 Q.
What was your first job?
3 worked in what we call notice review where after the tax
4 A.
I was a data transcriber.
4 return has been prepared, that's for the balances, whether
5 Q.
And data transcriber, correct me if I'm wrong, if we
5 you're going to get a refund or whether you're going to get a
6 were sitting down at the IRS office in the spring of every
6 balance due notice is sent to this area, and we check it to
7 year, you have all of this information that is flowing in and
7 make sure it is correct. We go back and check the return to
8 people that are data transcribers are taking information,
8 see if any payments or anything else was left off of the
9 typing it in, loading it into the computer, is that correct?
9 account. I was in criminal investigation, worked for the
10 A.
That's correct.
10 questionable refund unit where we questioned refunds on tax
11 Q.
How long were you a data transcriber?
11 accounts. We verified to see if these refunds were valid
12 A.
I was a data transcriber for approximately four months.
12 refunds.
13 Q.
And what did you do after that?
13 Q.
14 A.
I went to an area called photocopy.
14 function that you're in now?
15 Q.
And -- just kind of give us an idea of what you have
15 A.
Yes, sir.
16 done at the IRS since you started to work for them.
16 Q.
All right.
17 A.
17 A.
That's a part of the function I'm in now.
18 photocopy unit where requests are sent into the IRS for
18 Q.
So you have been working criminal investigation for how
19 photocopies of your tax returns. We photocopy this
19 long?
20 information and send it to you for your records. From there,
20 A.
I have been in criminal investigation for nine years.
21 I went to a typing unit where I transcribed letters that will
21 Q.
Nine years. And that requires you to do things like --
22 be sent out to the taxpayers. From there, I have worked many
22 you said, I believe, on direct that you're a court witness.
23 places. I have worked -- majority of my time was spent in
23 A.
Yes, I am.
24 collections where I worked with tax delinquent accounts and
24 Q.
That means coming to court and testifying in cases like
25 where I set up installment agreements for taxpayers, written
25 this?
I started as a data transcriber. From there, I went to
You mentioned criminal investigation, is that the
286
285
A.
Court witness coordinator is my current job title. I
is input is something that you can ultimately see when you get
2 do research accounts. I request the information for these
2 a computer printout known as an IMF, right?
3 accounts and prepare these accounts for court for the special
3 A.
Yes, sir.
4 agents.
4 Q.
For something like a tax return that flows into the
5 Q.
5 service center, is it not true that one of the first things
Now, can I describe for you -- you know, you have
6 offered into -- through your testimony Exhibit Number 1. Can
6 that gets done or at some stage of this process, you mentioned
7 I ask you some questions about that, about how it's created?
7 during your direct testimony this thing known as a document
8 A.
Yes, sir.
8 locator number?
9 Q.
Okay. That's the IMF complete?
9 A.
Yes, sir.
10 A.
Yes, sir.
10 Q.
It gets stuck on a return, right?
11 Q.
Let me ask you these questions, see if I got the
11 A.
Every document that comes into the service center has
12 picture right. A whole bunch of information flows into
12 to have a document locator number because that is what we use
13 service centers, you got tax returns, you got all sorts of
13 to track and try to find this document.
14 documents?
14 Q.
15 A.
Yes, sir.
15 1040 -- you mentioned I think you were reading off on the '92
16 Q.
And they flow in and the data transcribers sit down and
16 return a document locator number for Ms. Kuglin's return?
All right. And that information, you know, let's say a
17 take the information off of it, right?
17 A.
Yes, sir.
18 A.
Yes, sir.
18 Q.
All right. And that gets inserted about the time that
19 Q.
And that information gets inserted into the IRS
19 the return gets filed, right?
20 computers, right?
20 A.
Yes, sir.
21 A.
Yes, sir.
21 Q.
And that information gets logged into the computer,
22 Q.
And so these -- these inputs of information are made at
22 right?
23 a certain time, correct?
23 A.
Right.
24 A.
They are made all during the year.
24 Q.
And so that if someone like you wants to find
25 Q.
All right. And the approximate time in which the data
25 something, all you have to do is pull up the electronic file
288
287
on every one, right?
specific tax year, for the tax year 1996. You also have 1997
2 A.
Clarify by what you mean by electronic file.
2 in here, 1998, 1999 and 2000.
3 Q.
Okay. The individual master file.
3
MR. BECRAFT: Your Honor, can I approach again?
4 A.
Yes, sir.
4
THE COURT: You may.
5 Q.
For the benefit of the jury, an individual master file
5 Q.
I've just stuck back on -- in front of you there
6 is kind of a --
6 Government's Exhibit Number 1, and can you kind of compare
7
7 them? I'm just asking for the -- Government's Exhibit Number
MR. MURPHY: Judge, I'm going to object to
8 counsel testifying. He can ask the witness a question.
8 1, I don't know the date on it, but --
9
MR. BECRAFT: I will frame it in a question.
9 A.
10
10 entity information, the tax returns that have been filed by
11 Q.
Is it not true that an individual master file is
Number 1 is a complete, which is every year, your
11 this taxpayer. The exhibit you gave me, this one is for a
12 basically the computer record regarding the various documents
12 specific year. They are one and the same, but the specific is
13 that are filed regarding a particular individual?
13 broken down per each tax year where the complete is all of the
14 A.
Yes, sir.
14 tax years together.
15 Q.
All right. So you can print it out and it will say
15 Q.
You don't deny -- listen to my question, on Government
16 Exhibit Number 1, I don't know the date, but off the top of my
16 year?
17 A.
I can call up specific years.
17 head, I think it is November of 2002, is that about right?
18 Q.
Okay. And -- but then, you know, to take a look --
18 A.
Right.
19 well, let me ask you this: May I approach the witness, Your
19 Q.
Okay. And Defendant's Exhibit Number 52 bears a date,
20 Honor?
20 correct me if I'm wrong, it says 10-9-of 2001?
21
21 A.
Right.
22 Q.
Now, do you deny that this is an authentic print that
22 Q.
THE COURT: You may.
Now, I don't have Government Exhibit Number 1, but I
23 have tendered to you a copy of Defense Exhibit Number 52, and
23 comes from the IRS's computer regarding Vernie Kuglin?
24 I would like to ask if you could identify that for me, please.
24 A.
What do you mean do I deny?
25 A.
25 Q.
Well, do you accept that this is a specific --
Yes, sir, this is a IMF, individual master file for a
290
289
A.
Yes, sir.
2
MR. BECRAFT: Your Honor, may I move for the
that's fine, as long as we're not on the microphones.
2
THE COURT: All I have to do is hit that button
3 admission of Defense Exhibit 52.
3 and they can't hear you.
4
4
MR. MURPHY: Okay. Good.
5
5
THE COURT: Now, you're at side bar.
6 IMF Transcript.)
6
MR. MURPHY: Close enough. Judge, the defense
7 Q.
7 is going to offer a copy of this IMF transcript, and on
Can I ask you some questions about this and since I
8 have a copy of this one and not the government's, can we refer
8 it, it has got -- for several of these years, and it
9 to Exhibit Number 13?
9 indicates a modified balance, accrued interest and penalty
10 A.
Yes, sir, I have turned to the same page.
10 of zero, zero, zero for some of the years covered in the
11 Q.
Let's show the jury what this looks like.
11 indictment. And this witness -- this particular witness
12
MR. BECRAFT: If it please the court, I have
12 didn't testify that there was any tax due and owing or
13 got copies.
13 that the IRS was carrying a balance on the account for the
14
14 years in question. So I would submit that it goes outside
THE COURT: Have you got your microphone on?
15 We will take a break and let y'all work out the
15 of the scope of the direct, and it also may be confusing
16 technology.
16 because I believe what the IRS procedure is if they don't
17
MR. BECRAFT: Thank you, Your Honor.
17 have enough information or if there's not withholding,
18
THE COURT: Back in ten minutes.
18 they typically don't figure people's taxes as opposed to a
19
19 case where they have withholding and they do have
20
THE COURT: Yes, sir, Mr. Murphy.
20 information.
21
MR. MURPHY: We have got one matter to take up
21
MR. BECRAFT: If I may, Your Honor, that's not
22 at side bar.
22 where I'm headed. The government doesn't doubt that that
23
23 comes -- that's a document that comes straight out of
THE COURT: Okay. Sure, come on up. I mean
24 there's nobody in here.
24 discovery. For all of my exhibits, I unfortunately
25
25 premarked all of my exhibits and put defense stickers on
MR. MURPHY: The only thing is if we're on --
292
291
MR. BECRAFT: There's two different types of
them, but I'm using that particular exhibit because it's
2 handy, it's similar to Government Exhibit Number 1. The
2 transcripts, Your Honor. One is a complete and one is a
3 witness has authenticated it, and what Mr. Murphy fears is
3 specific.
4 the use to which I will be putting the document is simply
4
5 not the case. I'm not going to talk about -- you know, we
5 stricken or what do you want?
6 got -- what Mr. Murphy gave to me in discovery bears a
6
MR. BECRAFT: No, I offered it, Your Honor.
7 date in November of 2001 -- or October of 2001, and the
7
THE COURT: Mr. Murphy wants me to do something
8 one that the government has used, which is a similar kind
8 to 13.
9 of computer record printed out is about a year later, but,
9
10 you know, I'm not making any bones of contention about the
10 that's -- I don't think you can use another document to
11 difference in the transactions between the two documents.
11 cross-examine the witness -- you know, the witness about
12
12 of a business record like this. Or if I had some idea
MR. MURPHY: Judge, and my understanding is
THE COURT: Let me see 1. You want Exhibit 13
MR. MURPHY: Well, Judge, I don't think
13 there isn't any difference. We just -- in order for her
13 about what he was trying to do, it may be something that I
14 to certify a copy of it, she had to print a new one.
14 would just say, yeah, he gets to do it, Judge.
15
MR. BECRAFT: Okay.
15
16
THE COURT: What do you want to do with Exhibit
16 only -- the reason -- Your Honor, I would like to have a
17 copy of Government Exhibit 1, I don't have one, so I'm
17 13?
18
MR. BECRAFT: I mean I can limit it to -- my
MR. BECRAFT: I wanted to use it primarily
18 forced to kind of operate off of my discovery copy, which
19 because I don't have a copy of Government 1, which I would
19 is what I was doing.
20 like to --
20
21
21 being said, but it sounds like Exhibit 13 is withdrawn,
THE COURT: All you have to do is put it on the
THE COURT: Okay. Then I'm not clear what is
22 screen.
22 and you just want us to make a copy of Exhibit 1. Let's
23
MR. BECRAFT: Sure.
23 make a copy of Exhibit 1 and give it to him. Is that all
24
THE COURT: 13 is just duplicate.
24 we need to do?
25
MR. MURPHY: That's fine.
25
294
293
THE COURT: All right. Without objection,
that relate to a particular party, right?
2 Exhibit 13 is withdrawn.
2 A.
Correct.
3
3 Q.
So maybe in a few moments we'll will have Government
MR. MURPHY: Judge, we're going to see if we
4 have got a copy of what -- of what this witness --
4 Exhibit Number 1 back, but generally what you do -- you know,
5
5 in order for you to make a determination about filing or
THE COURT: They're making a copy right now.
6 It doesn't make any difference.
6 nonfiling in this case, you had to go to the computer, pull up
7
7 Vernie Kuglin's individual master file, correct?
All right. I show it as withdrawn. Anything
8 else?
8 A.
Would you repeat your question, please?
Government Exhibit Number 13, you probably have printed
9
9 Q.
10
MR. BECRAFT: That's it, Your Honor.
10 out the same thing several times before, at least, right?
11
THE COURT: You can bring the jury in.
11 A.
Yeah.
12
12 Q.
Every time you print it out, it is just basically the
13
THE COURT: If you're keeping track of the
13 same thing except if you got a later transaction, the later
14 numbers of exhibits, Exhibit 13 was simply withdrawn by
14 transaction will show up on a later print, is that about
15 agreement. Exhibit 1 apparently has the same data on it,
15 right?
16 and we didn't need another document, so we now have 12
16 A.
17 exhibits, and 13 is withdrawn.
17
MR. BECRAFT: May I approach, Your Honor?
18
Yes, sir, you may proceed.
18
THE COURT: You may. You can just put it on
19
19 the screen.
20 Q.
Ms. Osborne, we were, before the break, talking about
20
Correct.
MR. BECRAFT: I will do that, Your Honor.
21 how Government Exhibit Number 1, a computer printout named
21 Q.
Okay. Ms. Osborne, you can probably refer to the
22 individual master file was created. And, in essence, over a
22 original of Government Exhibit 1 and I will use a copy and I
23 period of time, various transactions are made or insertions
23 will stick it up on the Elmo, and let's -- okay. This is what
24 into the computer are kind of stored so that the IRS can print
24 Government Exhibit 1 looks like, correct?
25 out a document which contains all -- basically all the entries
25
THE COURT: Let's just put Exhibit 1 on the
296
295
screen, that's what we will do. Is that 1?
A.
2
2 Q.
MR. BECRAFT: Yes, Your Honor, it is. It's a
The cycle was 1966, cycle 20.
Okay. So you can take a look at this type of
3 copy. This is a copy.
3 information and get a real good idea as to what happened?
4
THE COURT: Let's use the original.
4 A.
Yes, sir.
5
5 Q.
All right. So you're interpreting it, correct?
6
THE COURT: The reason we do that, ladies and
6 A.
Yes, sir.
7 gentlemen, is you should be able to look at the original
7 Q.
Now, flip over to the second page, page number two of
8 or whatever is going to be shown to you in the jury room,
8 this. Okay, now --
9 there is no reason for you to later wonder.
9
10
10 in front of you.
THE COURT: It should be on your screen right
11
THE WITNESS: Yes.
12 about the returns that had been filed, you -- in essence, you
12
MR. BECRAFT: Let me move it out a little.
13 were doing -- you were looking at this document, and based
13
THE COURT: Sure.
14 upon your knowledge of how things get printed out, kind of
14 Q.
15 interpreting it, is that correct?
15 the screen, is that right?
16 A.
That's correct.
16 A.
Fairly close, yes, sir.
17 Q.
All right. So looking at page one of Government
17 Q.
And right down here where my finger is pointed, there's
11 Q.
You were talking -- or when you testified on direct
It looks like I have got everything on page two up on
18 Exhibit Number 1, you know, you got these transactions -- you
18 the words tax period 30, 1993, 12.
19 see where my finger is pointed over here on the left side of
19 A.
Yes, sir.
20 the page?
20 Q.
And that's kind of interpreted, that's the -- the 12 is
21 A.
Yes, sir.
21 the end of the year?
22 Q.
These are years down here in the middle so, that, you
22 A.
Right.
23 know, very first year is 1966?
23 Q.
Of 1993?
24 A.
Actually, that's a cycle.
24 A.
Right.
25 Q.
Okay, cycle. Would that relate to the year 1966?
25 Q.
Right? And so what the IRS does is that for everything
298
297
that related to year 1993, people log this stuff into the
Q.
2 computer, and so you're able to print out and show what
2 five that we get into '94 information, right?
3 happened at a particular time, right?
3 A.
That's correct.
4 A.
Yes, sir.
4 Q.
Okay. Where the jury is looking at my finger?
5 Q.
Now, for -- I flipped over to page three of Government
5 A.
Uh-huh.
6 Exhibit Number 1, and I think that you said that for 1993,
6 Q.
You can see tax period, 30, and that relates to '94?
7 this is a printout of everything that relates to Ms. Kuglin
7 A.
Yes, sir.
8 for the year 1993, is that correct?
8 Q.
And '94 has got -- I'm flipping to subsequent pages,
9 A.
9 and all of this is in computer lingo, so to speak, right?
Everything that came through the service center, yes,
10 sir.
Okay. And then it isn't until you get down to page
10 A.
Well, yes, sir, in a way.
The people inside the IRS know what these various
11 Q.
At least up to the date of 11-7 of 2002, right?
11 Q.
12 A.
Yes, sir.
12 transactions mean, right?
13 Q.
Okay. And so you reached the conclusion that for 1993,
13 A.
Most of them do, yes, sir.
14 there was a substitute for return filed in November of '95,
14 Q.
But in order to understand what they really mean, is
15 right?
15 there some kind of a manual that tells you what certain things
16 A.
Yes, sir.
16 mean like this transaction code 140 that my finger was on just
17 Q.
Okay. Where my fingers are pointed?
17 a second ago?
18 A.
Yes, sir.
18 A.
Yes, sir.
19 Q.
And so to -- you see this number 150 out to the side?
19 Q.
Is that a document 6209?
20 A.
Yes, sir.
20 A.
Yes, sir, it is.
21 Q.
Is that what is known as a transaction code?
21 Q.
Is document 6209 something you're familiar with?
22 A.
That is a transaction code.
22 A.
Yes, sir, it is.
23 Q.
All right. Now, let me flip over to '94, let's see,
23 Q.
Okay. You have to be very familiar, somebody in your
24 page four has more information about '93, right?
24 job that has worked in the position that you have worked for
25 A.
25 nine years, you pull up these computer printouts regarding a
Right.
300
299
whole bunch of people all the time, right?
filed an income tax return, what you do for like the later
2 A.
Yes, sir, I do.
2 years, what you did is you're looking for a transaction code
3 Q.
And then you have to kind of look at them and, you
3 or the absence of a transaction code, is that correct?
4 know -- this is plainly not English, it's transactions that
4 A.
That's correct.
5 are kind of coded in a certain way, but you know what their
5 Q.
And the absence of a transaction code -- let me back
6 meaning is, is that correct?
6 up. A minute ago, I mentioned something and you did too,
7 A.
Yes, sir, I do.
7 mentioned something about a document locator number?
8 Q.
Now, I think on your direct testimony, you mentioned
8 A.
Yes, sir.
9 for '94, there was a substitute for return?
9 Q.
And if I could direct us -- I happen to be on page five
10 A.
Yes, sir.
10 which relates to the year 1994, and you see this on the far
11 Q.
Okay. I'm on page five, what I'm showing on the Elmo
11 left-hand side where my finger is SFR, transaction code 150,
12 here, you see where my finger is, tax period 30?
12 right?
13 A.
Yes, sir.
13 A.
Uh-huh.
14 Q.
So if the jury is looking at this document, going back
14 Q.
And then this is date of the year?
15 to page five and six, all the way up to some spot, about
15 A.
The date that it was processed.
16 halfway down the page of page seven, that's the information
16 Q.
And that would be -- let's see, that's -- what is that
17 that relates to '94?
17 date, that's 1997?
18 A.
Yes, sir, it is.
18 A.
04-21-1997.
19 Q.
And you reached the conclusion about substitute for
19 Q.
And then out here to the side, you see where my finger
20 return -- you see where my finger is on page five?
20 goes, that's a 14 digit number?
21 A.
Yes, sir.
21 A.
Yes, that's document locator number.
22 Q.
Substitute for return that would relate for year '94 is
22 Q.
If you wanted to find something, if you're looking for
23 indicated where my finger is placed, SFR 150?
23 a particular return or maybe some other type of document, this
24 A.
Yes, sir.
24 computer printout, you know, will have that document locator
25 Q.
Now, in order for you to conclude that someone has not
25 number over there, and with that document locator number, you
302
301
THE COURT: Put one side on this side and one
can find any document that has been filed by the IRS, right?
2 A.
I can request that document, yes, sir.
2 side on this side. Come over here, Mr. Murphy, that way
3 Q.
They're not necessarily stored around here, but you
3 you're talking between her.
4 would know where a particular document is stored and contact
4
5 that party and say, hey, give me the document that has this
5 asking questions about the code book. You know, the
6 document locator number on it, right?
6 relevance of it.
7 A.
7
Yes, I have to submit my request to a person and they
MR. MURPHY: Judge, we're going to object to
THE COURT: It sounds like it would be
8 pull the document.
8 irrelevant.
9 Q.
9
MR. BECRAFT: Well, Your Honor, the --
10 significance to anybody except people in the IRS that can
10
THE COURT: Turn your mic off.
11 understand what the transaction codes mean, what the document
11
MR. BECRAFT: I think I got it off, Judge.
12 locator numbers mean, it simply is not in plain English, is
12 Your Honor, this is -- I don't want to belabor the point,
13 that correct?
13 that's not my purpose.
14 A.
That's correct.
14
15 Q.
And -- but there is a manual that kind of tells us what
15 government, move on.
Okay. Now, but as -- all of this stuff has no real
THE COURT: Okay. If you agree with the
16 certain things mean, is that correct?
16
MR. BECRAFT: The government offered Exhibit
17 A.
Yes, sir.
17 Number 1, and there is certain information on there that
18 Q.
And how long have you studied or been using or been
18 this witness is going to testify that she is familiar with
19 familiar with this document 6209?
19 the very manual I have got. True, the manual is not in
20 A.
For about 25 years.
20 evidence, but the manual is what I use in order to
21 Q.
Okay.
21 interpret the very document that the government has
22
MR. MURPHY: Judge, could we approach?
22 offered into evidence.
23
THE COURT: You may.
23
24
24 her good faith belief.
25 bench.)
25
THE COURT: It doesn't have anything to do with
MR. BECRAFT: There's a transaction code on the
304
303
MR. BECRAFT: Your Honor, this is what I would
government's document that I would like to have the
2 witness explain, that's where I'm headed. One transaction
2 like to point out for the benefit of the jury, in
3 code or one computer entry.
3 reference to the interpretation of Government's Exhibit
4
4 Number 1 --
THE COURT: Does it have anything to do with an
5 issue that is going to be decided by the court?
5
THE COURT: What is the thing we're
6
MR. BECRAFT: I think it does.
6 interpreting?
7
THE COURT: What issue is it?
7
8
MR. BECRAFT: I will go ahead and tell the
8 headed --
MR. BECRAFT: And according -- where I'm
9 court. Can I run back here and get something?
9
THE COURT: I'm looking on my screen. What are
10
THE COURT: Sure.
10 we looking for?
11
MR. BECRAFT: This will be my offer of proof if
11
MR. BECRAFT: This is -- I had it premarked as
12 53, but the manual, there's a certain transaction on the
12 the -13
THE COURT: Sure.
13 Government Exhibit Number 1, it's called a mail filing
14
MR. BECRAFT: Your Honor, I have got it over
14 requirement, it is present on that document, it is mail
15 here. This is the manual. Mr. Bernhoft got it, I have
15 filing requirement 01, and I think it is beneficial for
16 got my own manual. This is Mr. Bernhoft's copy of the
16 the jury to have the witness say there is a code on
17 manual.
17 Government Exhibit Number 1 that ultimately construed,
18
18 according to the manual, says return not required to be
THE COURT: Does she say that she got the
19 manual, reviewed the manual?
19 mailed to file. That's the point I'm trying to make with
20
MR. BECRAFT: They use the manual all the time.
20 this examination.
21
THE COURT: Did the defendant say that she got
21
MR. MURPHY: Well, Judge, here is the thing.
22 the manual and used the manual?
22 This came up when we were getting ready for it, what that
23
23 has to do with is the -- you know, they mail returns out
24
THE COURT: All right. Then let me understand
24 to everybody.
25 how it has got anything to do with anything.
25
THE COURT: Right.
306
305
MR. MURPHY: That has to do with the mailing of
this is -- this goes to the impeachment of -- well,
2 returns. But I mean I think what she is going to say is
2 construction of the document.
3 that that is a misinterpretation, that the return doesn't
3
4 have to be filed.
4 defendant relied on it, it's not relevant. And this
5
5 witness didn't offer an opinion that this defendant had to
THE COURT: The main thing is for me to
MR. MURPHY: Well, but, Judge, unless the
6 understand is where do you say that -- the IRS has some
6 file a tax return.
7 document, something that she relied on, she can tell us
7
8 about it, but this doesn't sound like this is what it is.
8 what the codes are on here. It has got a bunch of codes
9 It sounds like this is an internal --
9 on here. I mean unless she had something that she relied
10
10 on, it wouldn't matter what is in an internal document --
MR. BECRAFT: I have been down this road a
THE COURT: I mean we have got -- let's see
11 number of times, Your Honor. This is an official document
11 this is an internal document?
12 of the government. 6209 interprets all that computer
12
13 stuff.
13
THE COURT: It is a computer printout. It's
14
THE COURT: Sure.
14 their road map.
15
MR. BECRAFT: There is a code on Government
15
MR. BECRAFT: Right.
16 Exhibit Number 1, and as I lead through, Your Honor I can
16
THE COURT: Well, I mean if she had gotten the
17 show the court, if the court wants me to run over there
17 notice that said 01, not required to file a return, then
18 and get it off the Elmo, I will show you where it is.
18 that's one thing, but that's not -- this isn't it, this is
19
19 just part of the certificate of official record, and it
20
MR. BECRAFT: That symbol, page number one, MFR
20 then has a series of codes on it, a lot of other
21 01, it's called mail filing requirement of the manual, and
21 information. I think Mr. Murphy is right, I don't see how
22 these are the transactions for mail filing requirement.
22 it's going to go anywhere, that is lead to anything that
23
THE COURT: Uh-huh.
23 is relevant to any issue in this case to ask this witness
24
MR. BECRAFT: And that symbol right there
24 about this code. Mr. Murphy, why -- what harm does it do?
25 construed, according to the manual, it says -- and I think
25
MR. MURPHY: Well, Judge, I think it creates
308
307
THE COURT: Where is this from?
confusion, and the gist of his defense is, I relied, you
2 know, I -- if it's a good faith defense, there is nothing
2
3 that shows that she relied upon this. And I think it is
3 offer of proof would be that I would get her to
4 going to confuse everything.
4 authenticate the manual, authenticate that this is a page
5
5 from that manual, page 8-77.
THE COURT: I think it is conceded that she
MR. BECRAFT: That's from their manual. My
6 didn't have this document, that's what I understood to be
6
THE COURT: Okay.
7 said.
7
MR. BECRAFT: You know, this is just an exhibit
8
MR. BECRAFT: Yes.
8 that I would tender in support of this line of questioning
9
THE COURT: And that she didn't utilize this
9 elicited from this witness.
10 document in making -- in forming her beliefs, and,
10
THE COURT: That's no problem. If you want to
11 therefore, it really is not probative on the issue before
11 make it A or Exhibit A in the case.
12 the jury.
12
MR. BECRAFT: Okay.
13
MR. BECRAFT: Okay, Your Honor.
13
THE COURT: This is not an exhibit received, it
14
THE COURT: So I'm going to sustain Mr.
14 is just marked for identification.
15 Murphy's objection.
15
16
16
THE COURT: This is marked as Exhibit A for
MR. BECRAFT: Your Honor, can I also offer,
17 being mindful that I have stuck exhibit stickers on this,
17 identification.
18 can I move this labeled Defendant's Exhibit 53, which
18
MR. BECRAFT: Thank you, Judge.
19 is -- put it in the ID category?
19
(Exhibit Number A was marked. Description:
20
20 Document 6209.)
THE COURT: I mean this hasn't been presented
21 through anybody I could receive it through anyway, could
21
22 I?
22 court.)
23
MR. BECRAFT: No, this is my offer of proof,
23 Q.
Now, Ms. Osborne, I'm going to -- do you have the copy
24 where I was ultimately headed. This is a document that
24 in front of you?
25 construes --
25 A.
Yes, sir.
310
309
Q.
I'm going to -- you made some statements about -- page
A.
I have no idea about that.
2 number four relates to the year 1993, is that correct? Let me
2 Q.
Okay. Are you familiar with the process that, you
3 show you -- can you see page number four up there on the
3 know, in a situation like this, that the government has to
4 screen?
4 send out what is known as a ticket to tax court, a 90-day
5 A.
Yes, sir.
5 letter?
6 Q.
I'm going to look toward the bottom of page number
6 A.
Yes, sir, I'm familiar with a 90-day letter.
7 four, do you see that on the screen?
7 Q.
Does have it a certain particular transaction code?
8 A.
Yes, sir.
8 A.
The TC 300 usually has a 90-day letter that is a
9 Q.
You see these things, MF stat notices?
9 associated with it.
10 A.
Yes, sir.
10 Q.
11 Q.
That's what you call them, right?
11 year 1993 -- and I'm looking at page three and moving over to
12 A.
Yes, sir.
12 page four, those transaction codes, is there anything there
13 Q.
Now, you said during the course of your direct
13 that would indicate to you that this procedure of sending out
Okay. Do you see anything that in reference to the
14 testimony that for '93 and '94 and maybe '95, you correct me
14 a notice of deficiency was a procedure that was done?
15 if I'm wrong, that there were taxes withheld for Ms. Kuglin?
15 A.
The 90-day letter?
16 A.
Yes, sir.
16 Q.
Yeah.
17 Q.
And that at some stage there was an SFR or substitute
17 A.
I couldn't tell on this specific tax period.
18 for return that the IRS prepared for Ms. Kuglin, correct?
18 Q.
Well, isn't it customary or routine, at least, if the
19 A.
Correct.
19 government sent out a 90-day letter to someone to say that you
20 Q.
And ultimately there was a conclusion made by the IRS
20 owed additional taxes, that type of transaction would show up
21 that additional monies were due and owing, right?
21 on this document, Government Exhibit 1?
22 A.
Yes, sir.
22 A.
I couldn't say.
23 Q.
And, in essence, the government then levied upon the
23 Q.
Okay. Well, do you see -- flipping over to '94, and
24 money that was withheld from her paycheck for '93, '94, '95,
24 I'm on page five, and I'm going to flip over to page six,
25 is that correct?
25 where my fingers are, I'm going down the left side of the
312
311
page, those are transaction codes, right?
sent to the taxpayer.
2 A.
Yes, sir.
2 Q.
3 Q.
Now, do you see anything there that would indicate that
3 an entry that is recorded here, you have no personal knowledge
You don't know whether a document -- other than seeing
4 a 90-day letter had been sent to Ms. Kuglin?
4 that actual notices were actually sent to Ms. Kuglin, is that
5 A.
Not on this specific document.
5 correct?
6 Q.
Okay. How about -- let me flip over to my next -- I
6 A.
No, sir, I don't know.
7 moved over to page seven, is there anything on there that
7 Q.
And you have no actual knowledge that even 90-day
8 would tell you that a 90-day letter had been sent to Ms.
8 letters were sent to Ms. Kuglin at least for '93, '94, '95?
9 Kuglin?
9 A.
10 A.
Under the stat notices, no, sir.
10 out when a transaction code 300 is assessed, no, sir, I do
11 Q.
All right. Do you have any -- other than you reading
11 not.
Other than the fact that I know what is supposed to go
12 from this document, you can't tell us whether or not the
12
13 IRS -- you know, you said during your direct testimony, you
13
THE COURT: Redirect?
14 know, a notice was sent on such and such a date. Your
14
MR. MURPHY: If I could see some exhibits, Your
15 testimony in that respect arises just from you doing something
15 Honor.
16 like looking at this government exhibit, and, for example, on
16
17 page number ten, looking at the stat notices down there at the
17 BY MR. MURPHY:
18 bottom of the page, right?
18 Q.
19 A.
Yes, sir.
19 marked as Exhibit 9 in this case, and would you take a look at
20 Q.
And that's the way you reach certain conclusions?
20 that?
21 A.
Most cases.
21 A.
Yes, sir.
22 Q.
And just because something appears there, you say,
22 Q.
Okay. What is Exhibit 9?
23 well, I guess a notice was sent?
23 A.
This is the certificate of assessments, payments and
24 A.
24 other specified matters for the year 1992.
Notices have specific numbers, and those specific
25 numbers will indicate which notice or what type of notice is
25 Q.
Ms. Osborne, I'm going to pass to you what has been
Does that contain some of the information that's in
REDIRECT - MARY ANN OSBORNE
REDIRECT - MARY ANN OSBORNE
314
313
Exhibit 1 without computer codes?
going to turn to page two. Does that indicate notices were
2 A.
No, sir, it does not, '92 was not included on this.
2 sent to Ms. Kuglin?
3 Q.
Okay. I'm sorry. I'm sorry. Let me ask this: I've
3 A.
Yes, sir, it does.
4 gone back too far. I'm showing you what has been marked
4 Q.
Okay. And I'm going to show what you has been marked
5 Exhibit 10. Now, what is that?
5 as Exhibit 12 in this case. Again, what is Exhibit 12?
6 A.
6 A.
It is a certificate of assessments, payments and other
7 other specified matters for the Form 1040 for 1993.
7 specified matters for Form 1040 for the tax year 1995.
8 Q.
8 Q.
Okay. Let's put it up on the screen. Now, does this
Okay. Thank you.
9 contain some of the information that's -- that's in Exhibit 1?
9
Now, does this also contain information that is in the
10 A.
Yes, sir, it does.
10 uncoded form?
11 Q.
Okay. And is this that information without the codes?
11 A.
Yes, sir, it does.
12 A.
Yes, sir, it is.
12 Q.
And does that particular document indicate that a
13 Q.
Okay. And, in fact -- well, does Exhibit 10 indicate
13 statutory notice of intent to levy was issued on March the 9th
14 that delinquency notices were sent?
14 of 1998?
15 A.
Yes, sir, it does.
15 A.
Yes, sir, it does.
16 Q.
Okay. I'm showing you what's been marked as Exhibit 11
16 Q.
Okay. So the -- the certificates of assessments,
17 in this case. What is that, ma'am?
17 payments and other specified matters for 1040, those contain
18 A.
18 uncoded language?
19 other specified matters for Form 1040 for the year 1994
19 A.
20 Q.
20
MR. MURPHY: Okay. One second, Your Honor.
21 camera. Now, does this particular document also contain
21
Judge, I don't have any further questions.
22 information that was in Exhibit 1, for lack of a better word,
22
THE COURT: All right. Thanks very much. We
23 in the uncoded form?
23 will let you step down.
24 A.
Yes, it does.
24
25 Q.
Okay. And does that indicate notices -- well, I'm
25
Okay. Now, I'm going to put this document up on the
Yes, sir, it spells it out in plain English.
(Witness excused.)
THE COURT: Who is our next witness going to
DIRECT - KIMBERLY GILLUM
316
315
KIMBERLY GILLUM,
be?
2
MR. MURPHY: Your Honor, it is going to be Kim
3 Gillum from Federal Express.
4
THE COURT: If you would stop there at the
5 podium and raise your right hand. Do you swear that the
5
6 testimony you are about to give in this case will be the
6 BY MR. MURPHY:
7 truth, the whole truth and nothing but the truth, so help
7 Q.
8 you God?
8 A.
Kimberly Gillum.
9
9 Q.
And would you spell your first and last name for the
THE WITNESS: Yes.
DIRECT EXAMINATION
10
10 court reporter?
11
11 A.
K-I-M-B-E-R-L-Y G-I-L-L-U-M.
12
12 Q.
Who do you work for, ma'am?
13
13 A.
FedEx.
14
14 Q.
And what is your position with FedEx?
15
15 A.
Paralegal records custodian.
16
16 Q.
They call them at FedEx these days, it's still Federal
17
17 Express?
18
18 A.
It is still Federal Express.
19
19 Q.
And is -- as part of your duties as custodian, are you
20
20 involved with the records at FedEx?
21
21 A.
Yes.
22
22 Q.
Okay. I'm going to hand to you a document and ask you
23
23 to tell us what that document is, please.
24
24 A.
This is Vernice Kuglin's employment application.
25
25 Q.
And does it --
DIRECT - KIMBERLY GILLUM
318
317
MR. BECRAFT: No objections, Your Honor.
2
and nothing but the truth, so help you God?
2
THE WITNESS: I do.
THE CLERK: You may take the witness chair.
3 Q.
Is that an employment application for FedEx?
3
4 A.
Yes, it is.
4
5 Q.
And what's the date it was issued or signed?
5
6 A.
June 17, 1985.
6
7 Q.
Okay. And what position was Ms. Kuglin applying for?
7
8 A.
Pilot.
8
9
MR. MURPHY: Your Honor, at this time, we would
9
10 move that into evidence as the next numbered exhibit.
10
11
11
12
12
13 Application.)
13
14
14
MR. MURPHY: And I don't have any further
15
16
MR. BECRAFT: No questions, either, Your Honor.
16
17
THE COURT: Ms. Gillum, thank you. We will let
17
18 you step down.
18
19
19
20
(Witness excused.)
MR. MURPHY: Your Honor, the next witness is
20
21 Elizabeth Edwards.
21
22
22
23
THE CLERK: Will you please raise your right
23
24 hand? Do you swear the testimony you are about to give
24
25 the court and the jury to be the truth, the whole truth
25
DIRECT - ELIZABETH EDWARDS
319
320
ELIZABETH EDWARDS,
A.
She is at the desk on my right side, has on an orange
2 jacket.
3
4 me, Your Honor.
5
5
DIRECT EXAMINATION
MR. BECRAFT: Stipulate she is sitting next to
THE COURT: Well, that's not the question. So
6 BY MR. MURPHY:
6 you want to finish the question?
7 Q.
7 Q.
8 A.
Elizabeth Edwards.
8 they pay people that work out there and the amount of taxes
9 Q.
And how do you spell your first and last name?
9 withheld and that sort of thing?
10 A.
E-L-I-Z-A-B-E-T-H E-D-W-A-R-D-S.
10 A.
11 Q.
Who do you work for?
11
12 A.
Federal Express Corporation.
12 Judge, if you want -- I don't think there's going to be
13 Q.
What do you do at Federal Express?
13 any objection to these, I can put these on the screen and
14 A.
I'm manager of payroll taxes and garnishments.
14 she can look at them on the screen.
15 Q.
Okay. And are you involved with income tax withholding
15
Ma'am, does FedEx keep records of the amount of wages
Yes, sir.
MR. MURPHY: Your Honor, if I may approach.
THE COURT: Without objection, they can be
16 on FedEx employees and maintenance of the W-4s, that sort of
16 displayed.
17 thing?
17
18 A.
Yes, sir.
18 Honor. No objections, Your Honor.
19 Q.
Now, do you know a lady that works for FedEx named Ms.
19
MR. BECRAFT: Let me just look real quick, Your
THE COURT: All right. We can mark them
20 Vernice Kuglin?
20 sequentially, 13, 14 -- how many are there?
21 A.
Yes, sir.
21
22 Q.
Do you see Ms. Kuglin in the courtroom today?
22 altogether and put one exhibit sticker on it?
23 A.
Yes, sir.
23
THE COURT: It is really up to Mr. Murphy.
24 Q.
And can you describe for us where she is seated and
24
MR. MURPHY: Judge, I don't have an objection
25 what she is wearing, please?
MR. BECRAFT: I don't know, could we staple it
25 to that. This is all W-2s I'm going to deal with now. We
321
322
could make it collective. Collective Exhibit 14.
Q.
2
2 A.
1992.
3 W-2s.)
3 Q.
Now, I'm showing you another document, do you recognize
4 Q.
4 that document?
Okay. Ms. Edwards, if you look at the screen up there,
Okay. And, again, what year was that for?
5 I'm going to try and zoom in on this. Do you recognize that
5 A.
Yes, I do.
6 document?
6 Q.
And what is that document?
7 A.
Yes, sir.
7 A.
It's a facsimile of the 1993 W-2.
8 Q.
And what is that document?
8 Q.
And who is it for?
9 A.
It's a facsimile of a W-2 for the employees.
9 A.
Vernice Kuglin.
10 Q.
And is -- did you -- these documents I have got, you
10 Q.
And what amount of -- what was her pay?
11 gathered a bunch of these up for us?
11 A.
Her wages, federal wages?
12 A.
Yes, sir.
12 Q.
Her wages.
13 Q.
And these came from FedEx records?
13 A.
$107,386.87.
14 A.
Yes, sir.
14 Q.
And does that particular document show the amount of
15 Q.
Now, is that your handwriting at the bottom of the
15 federal tax withheld?
16 date?
16 A.
$20,847.53.
17 A.
Yes, it is.
17 Q.
Okay. Is that that figure with federal tax next to it?
18 Q.
And is that a document for Ms. Kuglin?
18 A.
Yes, it is.
19 A.
Yes, it is.
19 Q.
Okay. I'm showing you another document, can you tell
20 Q.
Okay. How much in wages were reported?
20 us what that document is?
21 A.
$113,293.25.
21 A.
It's a facsimile of the W-2 for 1994.
22 Q.
Okay. And how much federal tax was withheld?
22 Q.
Who was that for?
23 A.
$22,227.65.
23 A.
Vernice Kuglin.
24 Q.
Is that that figure right next to fed tax?
24 Q.
Okay. And what were the amount of -- Ms. Kuglin's
25 A.
Yes, it is.
25 wages in that year?
323
324
A.
$118.815.
Q.
What year was that for then?
2 Q.
And how much federal income tax was held?
2 A.
1996.
3 A.
$24,311.24.
3 Q.
I have got another document that is up there on the
4 Q.
And is that that figure with the word fed tax written
4 screen. Can you see it okay?
5 next to it?
5 A.
Yes.
6 A.
Yes, it is.
6 Q.
Okay. What is that document?
7 Q.
I'm showing you another document, can you tell me what
7 A.
It's a facsimile of the W-2 for the year 1997.
8 that document is?
8 Q.
And what amount of wages does that document show?
9 A.
It's a facsimile of the 1995 W-2.
9 A.
$172,674.37.
10 Q.
And is that for a particular FedEx employee?
10 Q.
And how much federal income tax was withheld?
11 A.
For Vernice Kuglin.
11 A.
There was zero federal tax.
12 Q.
And how much did Ms. Kuglin make that year?
12 Q.
I'm going to show you another document. What is that
13 A.
$112,112.85.
13 document?
14 Q.
And that would be that figure right there?
14 A.
It's a W-2 for Vernice Kuglin.
15 A.
Yes, sir.
15 Q.
Okay. And what year is it for?
16 Q.
And does it show how much federal tax was withheld from
16 A.
1998.
17 her paycheck?
17 Q.
Okay. And what was the amount of wages?
18 A.
$22,218.73.
18 A.
$164,196.
19 Q.
Okay. Ma'am, I'm showing you another document, can you
19 Q.
And was any tax withheld?
20 A.
No federal income tax.
21 A.
It's 1996 facsimile of the W-2 for Vernice Kuglin.
21 Q.
Okay. I'm going to show you another document that's
22 Q.
And what was the amount of wages paid to Ms. Kuglin?
22 part of this collective exhibit. What is that document?
23 A.
$183,408.01.
23 A.
It's a W-2 for 1999 for Ms. Vernice Kuglin.
24 Q.
And what was the amount of federal tax withheld?
24 Q.
And what was the amount of wages she was paid that
25 A.
There was no federal tax withheld.
25 year?
325
326
A.
You're going to have to bring that a little closer.
Q.
Ma'am, can you tell us what a Form W-4 is for?
2 Q.
I have the same problem.
2 A.
W-4 provides the employer the information from the
3 A.
1724 -- $172,428.
3 employee, their social security number, name, address, number
4 Q.
And how much federal income taxes withheld?
4 of withholdings for income tax purposes, federal income tax
5 A.
There was no federal incomes withheld.
5 purposes.
6 Q.
The next document I'm showing you, what is that?
6 Q.
7 A.
It's a W-2 for Ms. Vernice Kuglin from the year 2000.
7 Exhibit 15. Can you tell me what that is?
8 Q.
Okay. And what was the amount of her wages that year?
8 A.
This is a Form W-4 from 1988 for Vernice B. Kuglin.
9 A.
$191,292.99.
9 Q.
If you would go through all the other documents in
10 Q.
And was any federal tax withheld?
10 there.
11 A.
No, there was no federal tax withheld.
11 A.
12 Q.
Okay. What's the document that's up there now?
12 Vernice Kuglin, 1998 W-4 for Vernice Kuglin, 1999 W-4 for Ms.
13 A.
It's a copy of the W-2 from the year 2000 for Vernice
13 Kuglin and a 2000 W-4 for Ms. Vernice Kuglin and 2001 for Ms.
I'm going to pass you what has been marked Collective
1990 Form W-4 for Vernice Kuglin, 1997 W-4 for Ms.
14 Kuglin.
14 Vernice Kuglin W-4.
15 Q.
15 Q.
Okay. And these were records that came from FedEx?
16 that year?
16 A.
Yes, sir.
17 A.
$190,673.37.
17
18 Q.
And was any federal tax withheld?
18 admitted into evidence as Exhibit 15.
19 A.
There was no federal income tax withheld.
19
20 Q.
Okay. Thank you.
20
THE COURT: It's received.
Okay. And what was the amount of wages for Ms. Kuglin
21
MR. MURPHY: Judge, we have got a group of Form
21 Q.
If you would, ma'am, in 1988, how many withholding
22 W-4s, if we could make that collective exhibit.
22 exceptions did Ms. Kuglin claim?
23
THE COURT: Certainly. 15.
23 A.
Six.
24
24 Q.
Would you go to the next form, and in 1990, how many
25 W-4s.)
25 did she claim?
327
328
A.
Ten.
Q.
And to a particular account?
2 Q.
What's the next W-4 form?
2 A.
Yes.
3 A.
1997.
3 Q.
What's the account number?
4 Q.
Okay. And in 1997, what did Ms. Kuglin claim as her
4 A.
48512-076, and it goes to the bank ID number is
5 status regarding income tax withholdings?
5 284084350.
6 A.
Exempt.
6 Q.
7 Q.
Okay. And if I can -- keep going through that, what is
7 you this something, before we move this into evidence. Is
Okay. Thank you. Judge, at this time -- let me ask
8 the next year?
8 this the kind of thing that would -- that would take place
9 A.
9 because an employee directs it?
1998 was exempt. 1999 is exempt. 2000 is exempt.
10 2001 is exempt.
10 A.
Yes.
11 Q.
11 Q.
Okay.
12 like to show you. Ma'am, I'm going to show you another
12 A.
The employee is the only one who can make that change.
13 document, can you tell me what that document is?
13
14 A.
14 marked as the next exhibit.
Okay. Now, I have got another document that I would
It's a screen print of our banking screen in our FedEx
15 system, personnel system.
15
16 Q.
16
THE COURT: 16.
17 Express?
17
18 A.
It's for Vernice B. Kuglin.
18 FedEx Direct Deposit Entry.)
19 Q.
Okay. And what does that document authorize or direct
19 Q.
And is that for any particular person at Federal
Now, do you recall an incident where Ms. Kuglin turned
20 y'all to do?
20 in a W-4, but didn't sign it?
21 A.
21 A.
Yes, sir.
22 anything that she is paid from Federal Express direct
22 Q.
Okay. Do you recall about when that happened?
23 deposited.
23 A.
It was in 2000. Probably -- well, we send out
24 Q.
Where were they to be direct deposited?
24 notification letters in December to anyone who is filing --
25 A.
To the Federal Express Credit Association.
25 who has had exempt status in the year, and we request them to
It's a direct deposit request to have all her wages or
329
330
be returned to us by February the 15th, so it would have been
Q.
2 somewhere around -- from February 15th to the end of February.
2 A.
3 Q.
Okay. Would this be for tax year 2000?
3
4 A.
2001.
4 at my notes, I may be done.
5 Q.
2001, okay. Now, did Ms. Kuglin bring in a form that
5
6 wasn't signed or how did this -- the situation arise?
6
7 A.
I believe she sent the form in and it was not signed.
7 questions.
8 Q.
Okay. And do the forms have to be signed?
8
9 A.
Yes, they do.
9
10 Q.
And did you talk with her about it?
10 BY MR. BECRAFT:
11 A.
She did call me, yes.
11 Q.
12 Q.
What did she say about the form?
12 FedEx for some period of time, is that correct?
13 A.
She wanted to know why I didn't accept it, and I told
13 A.
Yes, sir.
14 her because it wasn't signed and told her that she would have
14 Q.
Would it be just the last couple of years?
15 to bring me a W-4 or get a W-4 that is signed in order for me
15 A.
Yes, last two years.
16 to honor it.
16 Q.
Isn't it true that as custodian of the records for the
17 Q.
17 FedEx business records that relate to withholding, you have
Did she add anything else, say anything about
Did she say anything else?
No.
MR. MURPHY: One second, Judge, if I can look
MR. BECRAFT: Briefly, Your Honor.
CROSS EXAMINATION
Ms. Edwards, you have been the head of the payroll at
18 withholding?
18 access to all of the employees W-4 forms going back as far as
19 A.
19 you keep records, is that correct?
Not on the phone call itself, I don't think. At the
20 meeting, when she brought me the W-4, she did.
20 A.
What's legally required, yes.
21 Q.
Okay. What did she say?
21
22 A.
She was very upset because we had held income tax out
22 Honor?
MR. BECRAFT: May I approach the witness, Your
23 of her paycheck, and she filled out the form, signed it and
23
THE COURT: You may.
24 said I want you to make sure you refund me my taxes, which we
24 Q.
25 did.
25 and ask you if you can identify that for me, please.
I'm going to show you a document, a Form W-4 dated 1995
CROSS - ELIZABETH EDWARDS
REDIRECT - ELIZABETH EDWARDS
332
331
A.
It is a W-4 for Ms. Vernice Kuglin.
2 Q.
Now, when you came to court, what the government has
2 BY MR. MURPHY:
3 asked you to do is to bring to court the forms W-4 that
3 Q.
Ms. Edwards, do you know if there were any problems
4 would -- that are after that date, is that correct?
4 locating a W-4 for like '96?
5 A.
Yes.
5 A.
6 Q.
All right. And the one that you have in front of you
6 now is in vital records for that period of time, it's in
I don't know that there is a problem. Everything right
7 is an exempt W-4 form dated December the 30th of '95, right?
7 storage.
8 A.
Yes, sir.
8 Q.
9 Q.
Do you know whether or not that is the actual Form W-4
9 refresh your recollection. I'm showing you what has been
Okay. I'm going to show you something, see if that may
10 that Vernice Kuglin submitted to FedEx in December of '95?
10 marked Exhibit 15.
11 A.
No, sir, I do not.
11 A.
12 Q.
Have you ever seen that before?
12 has 1996 marked through it and 1997 written beside it, there's
13 A.
I have seen it, yes.
13 a note at the bottom that says 1996 is no longer available,
14 Q.
Do you doubt that that is the exempt W-4 form that
14 it's signed by Kim Gillum.
Right, right. This particular W-4 that's marked 19 --
15 Vernice Kuglin submitted to FedEx?
15
16 A.
16 questions.
17
No, sir, I don't doubt it.
MR. BECRAFT: Your Honor, I move the admission
17
THE COURT: All right. Ms. Edwards, thank you,
18 of that as the next exhibit.
18 we will let you step down.
19
MR. MURPHY: No objection, Your Honor.
19
20
THE COURT: 17.
20
THE COURT: Who will our next witness be?
21
21
MR. MURPHY: Judge, our next witness is going
(Witness excused.)
22 1995 Form W-4.)
22 to be Karlene Nuby.
23
THE COURT: Anything else from the government?
23
24
MR. MURPHY: Yes, sir, Your Honor, just one
24 please, and raise your right hand. Do you swear that the
25 question.
THE COURT: If you would step to the podium,
25 testimony you are about to give in this case will be the
DIRECT - KARLENE NUBY
334
333
KARLENE NUBY,
truth, the whole truth and nothing but the truth, so help
2 you God?
3
THE WITNESS: I do.
4
THE COURT: You may have a seat up here,
5 please.
5
DIRECT EXAMINATION
6
6 BY MR. MURPHY:
7
7 Q.
8
8 A.
Karlene Nuby.
9
9 Q.
10
10 court?
11
11 A.
12
12 Y.
13
13 Q.
And who do you work for, Ms. Nuby?
14
14 A.
Kemper Services.
15
15 Q.
What business is Kemper Services in?
16
16 A.
Disability insurance.
17
17 Q.
Is Kemper Insurance involved in a program with FedEx?
18
18 A.
Yes, we are.
19
19 Q.
Okay. And what -- briefly tell us the nature of that
20
20 program.
21
21 A.
22
22 short-term and long-term disability for FedEx employees.
23
23 Q.
24
24 at that document and tell me what it is?
25
25 A.
Sure. K-A-R-L-E-N-E. Last name is N-U-B, as in boy,
Basically, our responsibility to Kemper is to provide
Okay. I'm going to hand you a document. Can you look
It's a 1998 W-2 that was issued to Vernice Kuglin.
336
335
Q.
Okay. And could you spell the first and last name?
2 A.
Sure. First name is V, as in Victor, E-R-N-I-C-E --
2
MR. MURPHY: No further questions, Your Honor.
3 Q.
And what's the social security number?
3
4 A.
514-44-1724.
4
THE COURT: Certainly. I'll do it from here.
5 Q.
Okay. Now, what does that particular document
5
CROSS EXAMINATION
6 indicate?
6 BY MR. BECRAFT:
7 A.
7 Q.
Ms. Nuby, you don't know Vernice Kuglin, do you?
8 Services paid to Ms. Kuglin wages in the gross amount of
8 A.
No, I do not.
9 $4,789.37. It indicates the amount of taxes that were
9 Q.
You just work for the insurance company that paid
10 withheld for federal, social and Medicare.
10 disability, is that correct?
11 Q.
What amount of taxes was withheld?
11 A.
Correct.
12 A.
Federal income tax that was withheld was $1,341.03,
12 Q.
Do you have any idea when the disability was paid or
Basically, this document indicates that we at Kemper
13 social security tax withheld was $296.94. Medicare tax
13 what it was for?
14 withheld was $69.45.
14 A.
15 Q.
And what was the amount of the wages?
15 disability. The dates that it was paid for, I don't want to
16 A.
The wage amount was $4,789.37.
16 take a guess at it, I believe it was some point in August of
17
MR. MURPHY: Thank you. Your Honor, at this
I do not know the -- it was paid for short-term
17 '98 for approximately 14 days.
18 time we would move this into evidence as the next numbered
18 Q.
19 exhibit.
19 disability in August of '98?
20
20 A.
Correct.
21
21 Q.
For about some 14 days?
22
22 A.
Correct.
23 W-2 Form.)
23 Q.
That's your recollection?
24
24 A.
Yes, it is, sir.
25 Q.
And, you know, if I got the document that is no longer
25 sir.
MR. MURPHY: Judge, if I could check my notes,
Okay. So the $4,800 that was paid is for payments of
CROSS - KARLENE NUBY
338
337
Your Honor, how late are we going to be going
in front of you, looked at it, what you just said is probably
2 gleaned from the document?
2 today?
3 A.
I'm sorry?
3
4 Q.
I'm sorry. Is that what that document says?
4 12:30. We're going to take a one hour lunch break.
5 A.
That --
5 Tuesdays, Thursdays, we take a little shorter lunch break,
6 Q.
Let me get it for you and let me approach the witness,
6 so we will take a shorter lunch break.
THE COURT: We're going to stop at 12:25,
7 Your Honor.
7
8 A.
Sure.
8 hand? Do you solemnly swear the testimony you are about
9 Q.
This Exhibit Number 18 relates to what you just told
9 to give the court and the jury to be the truth, the whole
10 truth and nothing but the truth, so help you God?
10 us?
11 A.
Correct, sir.
11
THE WITNESS: I do.
12 Q.
The $4,800 was paid for two weeks of disability?
12
13 A.
Correct.
13
14 Q.
In August?
14
15 A.
Of '98.
15
16
16
17
17
18
18
19 questions for this witness.
19
20
20
THE COURT: All right. Thank you. We will let
21 you step down.
21
22
22
(Witness excused.)
23
23
24
MR. MURPHY: It's going to be Dan Haughton,
24
25 Your Honor.
25
DIRECT - DANIEL JOSEPH HAUGHTON
340
339
DANIEL JOSEPH HAUGHTON,
mortgage interest paid?
2 A.
Yes, sir.
3 Q.
Could you -- was it in summary form?
4 A.
Yes.
5
5 Q.
Would you get that out, because I need --
6 BY MR. MURPHY:
6 A.
Actually, I have -- there's a computer printout from
7 Q.
Would you state your name, please?
7 our computer system that's called a transaction history
8 A.
Daniel Joseph Haughton.
8 report.
9 Q.
Would you spell your first, middle and last name for
9 Q.
Okay.
10 the court reporter?
10 A.
And from that report, I summarized interest payments
11 A.
D-A-N-I-E-L J-O-S-E-P-H, Haughton is H-A-U-G-H-T-O-N.
11 over the course of the loan.
12 Q.
And who do you work for, sir?
12 Q.
If you could get your summary out.
13 A.
Starwood Vacation Ownership, Incorporated.
13 A.
Okay.
14 Q.
And what business is Starwood Vacation Ownership is?
14 Q.
Thank you, sir.
15 A.
Starwood markets and develops and sells and manages
15
16 vacation ownerships or time share resorts all over the U. S.
16
17 Q.
And how long have you worked for the company?
17 Q.
18 A.
It will be five years in October.
18 explain to us what that document is.
19 Q.
Okay. And are you familiar with the records that the
19 A.
DIRECT EXAMINATION
Sir, I'm handing you this document, and if you would
It simply summarizes the interest paid on a -- there
20 company keeps?
20 are actually two accounts that were in the name of Vernie B.
21 A.
Yes, I am.
21 Kuglin, and it summarizes the interest paid on each account
22 Q.
Did you bring some record with you today that has to do
22 during the years that the accounts were open, the first
23 with a Vernice Kuglin?
23 account was '92, '93, '94, '95 and '96, and the second was '91
24 A.
Yes, I did.
24 '92, '93, '94, 95.
25 Q.
And specifically was there a record that had to do with
25 Q.
Would that be mortgage interest?
CROSS - DANIEL JOSEPH HAUGHTON
342
341
A.
Yes, sir, mortgage interest.
2 Q.
And for 1996, what was the amount of mortgage interest
Q.
Okay. So this time share, would it be in a condo
2 somewhere in the Orlando community?
3 paid by Ms. Kuglin to your -- Ms. Kuglin to your firm?
3 A.
Yes, sir.
4 A.
4 Q.
Okay. And so in October of '90 is the first time that
5
In 1996, the amount paid was $1,047.79.
5 she entered into an agreement with your company to have a time
6 share condo down there in Orlando?
7
7 A.
That's correct.
8
8 Q.
And did she have, say, like about a week's worth of
9 Mortgage Interest Summary.)
9 time?
10
10 A.
That's typically the way they're sold, yes.
11
11 Q.
The first -- the October of '90?
12
CROSS EXAMINATION
12 A.
Yes, sir.
13 BY MR. BECRAFT:
13 Q.
And then a couple of years later, she entered into an
14 Q.
14 agreement to get basically another week?
Mr. Haughton, briefly, where are these time shares
15 located?
15 A.
Yes, sir.
16 A.
16 Q.
Of time share of your condo in Orlando?
17 Florida, South Carolina, Beaver Creek, Colorado, Mission
17 A.
Yes, sir.
18 Hills, California and Maui, Hawaii.
18 Q.
Is there a market -- if somebody wants to get out of
19 Q.
19 these, is there a market where they can sell their interest to
We have resorts in Orlando, Florida, St. Augustine,
All right. Do you have any idea as to when Ms. Kuglin
20 bought a time share from your company?
20 someone else?
21 A.
Yes, I do.
21 A.
22 Q.
Okay. When was it?
22 people trying to sell.
23 A.
Let's see, on this particular account, the purchase
23 Q.
There's a market, but it is entirely saturated with
Okay. And in the -- the relationship between your
24 date is recorded as October the 31st, 1991, and on the
24 company and Ms. Kuglin ended, I take it, sometime in '97?
25 previous account, it was October the 2nd, 1990.
25 A.
The account was paid off, I believe -- yeah, the
CROSS - DANIEL JOSEPH HAUGHTON
344
343
account was paid in full, but that doesn't necessarily end the
2 relationship because --
3 Q.
Okay.
3 to give the court and the jury to be the truth, the whole
4 A.
Okay.
5 Q.
So you're saying right now she has had -- since October
5
THE WITNESS: I do.
6 of 1990, she has had a time share even right now with your
6
7 company?
7
8 A.
Unless she has sold it, that I'm not aware of, yes.
8
9
9
10 Honor.
10
11
11
MR. MURPHY: Judge, I just have one question
12 that I omitted.
12
13
13
14 BY MR. MURPHY:
14
15 Q.
Is mortgage interest reported to the IRS?
15
16 A.
Yes, sir.
16
17
17
18 questions.
18
19
19
THE COURT: All right. Thank you. We will let
20 you be excused.
20
21
THE WITNESS: Thank you.
21
22
(Witness excused.)
22
23
23
24
MR. MURPHY: Your Honor, we call Isabelle
24
25 Baker.
25
DIRECT - ISABELLE BAKER
346
345
ISABELLE BAKER,
A.
They're 1098s.
2 Q.
3 mortgage interest that somebody pays over the course of a
4 year?
5
5 A.
Yes, sir.
6 BY MR. MURPHY:
6 Q.
Okay. Now, the first document, what year is that for?
7 Q.
7 A.
For 1999.
8 A.
Isabelle Baker.
8 Q.
And who was the person that was paying the mortgage?
9 Q.
And would you spell your first name and last name for
9 A.
On the 1098, it says Vernice B. Kuglin.
10 Q.
Can you spell the entire name?
11 A.
I-S-A-B-E-L-L-E B-A-K-E-R.
11 A.
First name V-E-R-N-I-C-E, last name Kuglin,
12 Q.
And who do you work for, Ms. Baker?
12 K-U-G-L-I-N.
13 A.
GMAC Mortgage.
13 Q.
14 Q.
And what type of business is GMAC Mortgage in?
14 now is for 1999?
15 A.
In the mortgage business.
15 A.
Yes, sir.
16 Q.
Okay. That's kind of dumb second question, wasn't it?
16 Q.
And what was the amount of the interest?
17 A.
That's all right.
17 A.
Interest paid for 1999?
18 Q.
And as part of your business, do you keep records of
18 Q.
Yes, ma'am.
19 the amount of mortgage interest that people pay on mortgages
19 A.
Was $6,729.39.
20 held by your company or serviced by your company?
20 Q.
If you could turn that over, that page over.
21 A.
Yes, we do.
21 A.
Uh-huh.
22 Q.
Okay. Does -- I'm going to show you some documents, do
22 Q.
Turn that page over and go to the second sheet.
23 you recognize those documents?
23 A.
Okay.
24 A.
Yes, I do.
24 Q.
What is the second sheet?
25 Q.
Okay. What are those documents?
25 A.
Same kind of document for the year 2000.
DIRECT EXAMINATION
Okay. And do they give a figure of the amount of
And what was the amount in -- that sheet we're talking
348
347
Q.
MR. MURPHY: Your Honor, I don't have any
And what does it show, again?
2 A.
For interest paid?
2 further questions of the witness.
3 Q.
Yes, ma'am.
3
4 A.
$7,033.28.
4
5 Q.
And for what year was that?
5 BY MR. BECRAFT:
6 A.
For the year 2000.
6 Q.
7 Q.
Okay. I'm sorry. And who was the person that it was
7 this mortgage, you got documents for '99, 2000, and 2001, is
CROSS EXAMINATION
Ms. Baker, the interest that was paid by Ms. Kuglin on
8 issued to?
8 that correct?
9 A.
Same person, Vernice Kuglin.
9 A.
Yes, sir.
10 Q.
Okay. And if you would go to the third document. What
10 Q.
Now, is this a mortgage in relation to some real
11 does the third document show?
11 property, land?
12 A.
The same document for the year 2001.
12 A.
13 Q.
Okay. And what does -- is it issued to Ms. Kuglin?
13 guess -- it must be a residence.
14 A.
Yes, sir, it is.
14 Q.
15 Q.
And how much mortgage interest does it indicate she
15 regarding what type of residence is the collateral for this
It is -- I don't know whether it's land or -- I
Okay. And is there some brief description there
16 particular mortgage?
16 paid?
17 A.
It has the address.
18 Q.
What is the address?
19 this time, we would move these three documents into
19 A.
200 Wagner Place, number 802, Memphis, Tennessee 38103.
20 evidence as a collective exhibit.
20 Q.
Okay. Before 1999, did your company have any
21
THE COURT: Yes.
21 relationship with Ms. Kuglin?
22
MR. BECRAFT: No objections.
22 A.
I'm not aware of that, sir.
23
23 Q.
Your relationship with her arose during that year of
24
24 '99?
17 A.
18
$6,690.56.
MR. MURPHY: Thank you, ma'am. Your Honor, at
25 Mortgage Interest Payments.)
25 A.
I can't say whether there was a relationship prior to
CROSS - ISABELLE BAKER
350
349
THE COURT: Okay.
that year or not.
2 Q.
Your records indicate that some time in '99, your
2
THE CLERK: Would you please walk to the podium
3 company got a mortgage on her condominium?
3 and raise your right hand? Do you solemnly swear the
4 A.
Pardon me?
4 testimony you are about to give the court and jury will be
5 Q.
Your records indicate that Ms. Kuglin obtained with
5 the truth, the whole truth and nothing but the truth, so
6 GMAC a mortgage on her condominium some time, I guess, in '99?
6 help you God?
7 A.
Yes, sir.
7
THE WITNESS: Yes.
8 Q.
Probably the early part of '99?
8
9 A.
Yes, sir.
9
10 Q.
Okay. And it has been in effect ever since?
10
11 A.
Yes, sir.
11
12 Q.
And how much was the mortgage for when it was obtained
12
13 sometime in early '99, if you know?
13
14 A.
14
I just show principal balance, beginning principal
15 balance. I don't have that number that you're asking me.
15
16
16
17 Honor.
17
18
18
19 questions.
19
20
20
THE COURT: All right. Thank you. We'll let
21 you step down.
21
22
22
(Witness excused.)
23
23
24
MR. MURPHY: Your Honor, our next witness will
24
25 be Mr. Leporleon Pruitt.
25
DIRECT - LEPORLEON PRUITT
352
351
LEPORLEON PRUITT,
you tell me what the first document is?
2 A.
3 showing what they have in prime shares, that's savings, or
4 share draft, that's the checking account.
5
5 Q.
DIRECT EXAMINATION
First document is just the statement of the accounts
Okay. Can you tell us -- that's a big stack of papers,
6 BY MR. MURPHY:
6 whose account are we talking about there?
7 Q.
7 A.
Ms. Kuglin.
8 A.
Leporleon Pruitt.
8 Q.
Okay. Could you spell it?
9 Q.
And, Mr. Pruitt, who do you work for?
9 A.
K-U-G-L-I-N.
10 Q.
What's the first name?
11 A.
Vernice.
12 Pruitt?
12 Q.
Spell that, please.
13 A.
L-E-P-O-R-L-E-O-N. Pruitt, P-R-U-I-T-T.
13 A.
V-E-R-N-I-E.
14 Q.
And who do you work for?
14 Q.
And what's the account number?
15 A.
FedEx Employees Credit Association.
15 A.
The account number is 48512016.
16 Q.
And what business is the FedEx Employees Credit
16 Q.
Okay. What kind of account is it?
17 Association in?
17 A.
She has a prime share, that's a savings, and she has a
18 A.
The credit union business.
18 checking account as well.
19 Q.
Okay. And do you provide, as part of that business,
19 Q.
Okay. And can you give me the date on the first page?
20 banking service for FedEx employees?
20 A.
The date from the statement is from February the 1st of
21 A.
Yes, sir.
21 '96 to February the 29th of '96.
22 Q.
Okay. Mr. Pruitt, are you familiar with how records
22 Q.
Okay. How about the statement on the last page?
23 are kept at your company's business?
23 A.
The statement from the last page is from December the
24 A.
Yes, sir.
24 1st of 2000 to December the 31st of 2000.
25 Q.
I'm going to pass to you two sets of documents. Can
25 Q.
10
11 Q.
THE COURT: Let's get the spelling on that.
I'm sorry, Your Honor. How do you spell your name, Mr.
And are there several -- there's a number of statements
354
353
THE WITNESS: Yeah, it's Kuglin.
in there?
2 A.
Yes, sir.
2
THE COURT: Because your first name starts with
3 Q.
Okay. And these are all statements from your Credit
3 an L?
4 Union?
4
THE WITNESS: Yes.
5 A.
5
THE COURT: I wanted to make sure I got it
6
Yes, sir.
MR. MURPHY: Your Honor, if we could have this
6 spelled right.
7 marked as a collective exhibit.
7 Q.
And is that the document from the Credit Union's
8
MR. BECRAFT: No objection.
8 records?
9
THE COURT: It will be Exhibit 21.
9 A.
Yes.
10
10 Q.
If someone opens an account, they're required to
11 Statement of Accounts.)
11 execute that?
12 Q.
12 A.
Yes, sir.
13 what is that document?
13 Q.
Now, what's the date on that?
14 A.
This document here is the membership application.
14 A.
January the 27th of 1999.
15 Q.
Okay. And for who?
15 Q.
Okay. Now, the statements run before that?
16 A.
Vernice Kuglin.
16 A.
Right.
17 Q.
Vernice what?
17 Q.
What -- why is that date different?
18 A.
Kuglin.
18 A.
This date here is different because it looks like it
19 Q.
Okay. Does it appear to be Kuglin?
19 was something somebody added on the account or -- yeah, it
20 A.
Kuglin, yes.
20 look like somebody added on the account.
21 Q.
K-U-G-L-I-N
21 Q.
Now, sir, there's a second document in front of you,
Now, when these documents were originally requested,
22
THE COURT: It's Kuglin.
22 did you come up with the original account card, account
23
THE WITNESS: Kuglin.
23 opening form?
24
THE COURT: It's Kuglin. It is kind of like
24 A.
25 your first name, it's confusing.
Now, the original account card, these going through
25 images system, but this is on the system.
356
355
Q.
Okay. The one in your hand?
reference, I have got my finger on it?
2 A.
Yes.
2 A.
Yes.
3 Q.
Okay. Thank you.
3 Q.
EFT Federal Express?
4 A.
Right.
5 into evidence as the next numbered exhibit.
5 Q.
Salary, what is that in reference to?
6
6 A.
The EFT is the -- it's electronic funds transfer, it's
7
THE COURT: 22.
7 her salary.
8
8 Q.
Okay. And then you've got a notation of a withdrawal?
9 Application for Account.)
9 A.
Yes.
10 Q.
10 Q.
And what does that mean?
11 here and ask you about some entries on some of these
11 A.
That's a withdrawal that she took out on 4-15-96.
12 documents. I have got a document here from exhibit --
12 Q.
And then if you go over to this account, this line that
13 Collective Exhibit 21. Can you see that document?
13 says change to balance where my finger is?
14 A.
Yes, I can.
14 A.
Yes.
15 Q.
Okay. This first column, it says date, what
15 Q.
What information does that represent?
16 information is in that column?
16 A.
That is representing withdrawals, money going in and
17 A.
4-1 of '96.
17 out of the account.
18 Q.
What type of information do you put in there? Is
18 Q.
4
MR. MURPHY: Your Honor, we would move this
Now, sir, I'm going to put some things up on the camera
Okay. Does that give you the amount of a particular
19 that -- what dates are those?
19 transaction?
20 A.
20 A.
Those are the current dates like if -- from the
Yes, it does.
21 statement, when they do any kind of transactions.
21
22 Q.
22 I'm almost done.
Okay. So would that date represent the account
MR. MURPHY: Judge, if I can have one second,
23 transaction took place?
23
24 A.
Yes.
24 Q.
25 Q.
Okay. And if you go to this middle line, there's a
25 Exhibit 21. And -- now, the format of these documents is a
I'm going to show you another page from Collective
358
357
MR. MURPHY: Thank you, sir. One second, Your
little different. What information is in this first column
2 here on the left?
2 Honor, I'm just about done.
3 A.
The dates -- month, date and year.
3
4 Q.
Okay. And what do those dates signify?
4 Q.
5 A.
Those dates signify from the whole statement, from
5
Mr. Pruitt, when -MR. MURPHY: Judge, I don't think my microphone
6 November to the end of the month, and it signifies a date that
6 is working.
7 a transaction has happened.
7
8 Q.
8 Q.
Mr. Pruitt, does your company also lend money?
9 cash disbursed, what type of transaction is that?
9 A.
Yes, sir.
10 A.
That's a withdrawal from her checking account.
10 Q.
Okay. Now, when -- if it involves mortgage and
11 Q.
Okay. Now, just so we understand the way this is
11 mortgage interest, you report the amount of the interest to
Now, if you go over, there's a line, share draft to
THE CLERK: It may need a new battery.
12 formatted, you have got some transactions?
12 the IRS?
13 A.
I can't see your finger on that.
13 A.
14 Q.
Okay. Am I in the way?
14
MR. MURPHY: Okay. One second, Judge.
15 A.
Okay.
15
Judge, I don't have any further questions.
16 Q.
There you go. Is that better?
16
17 A.
Yes.
17
18 Q.
Okay. You have got some transactions that have a minus
18
19 symbol after them, does that indicate money was coming out of
19
20 the account?
20 BY MR. BECRAFT:
21 A.
Yes.
21 Q.
22 Q.
Okay. And when you have a transaction with no minus
22 you know?
Yes, we do.
CROSS EXAMINATION
Mr. Pruitt, when was the FedEx Credit Union started, do
23 sign behind it, for example, that $9,456.90, does that
23 A.
Back in 1973 -- '72, '73.
24 represent that money came into the account?
24 Q.
Is it your understanding that most, perhaps all of the
25 A.
25 FedEx employees are members of the Credit Union, right?
Correct.
CROSS - LEPORLEON PRUITT
CROSS - LEPORLEON PRUITT
360
359
A.
They have the -- they can join if they're a member --
A.
That, I don't know, sir.
2 if they work for FedEx, they have right to join the Credit
2 Q.
Do you know anything about cars?
3 Union.
3 A.
Yes, sir.
4 Q.
4 Q.
Did she have any mortgages -- or did your company
And the services that are provided by the Credit Union
5 include, you know, people can open up a savings account there?
5 finance any cars for her?
6 A.
Yes, sir.
6 A.
7 Q.
They can have a checking account?
7
8 A.
Yes, sir.
8 Honor.
9 Q.
They can obtain financing for homes and cars?
9
10 A.
Yes, sir.
10
11 Q.
In this particular situation, you have been asked to
11 questions.
That, I don't know, sir.
MR. BECRAFT: All right. Nothing further, Your
12 bring in reference -- to this particular case in reference to
12
THE COURT: All right. Mr. Pruitt, thank you.
13 Ms. Kuglin, you brought in basically her checking account
13 We will let you step down.
14 statements for a number of years?
14
15 A.
Yes, sir.
15
THE COURT: Who else do we have?
16 Q.
And those are Exhibits 21 and 22?
16
MR. MURPHY: Judge, I have got some custodians,
17 A.
Yes, sir.
17 but I need to talk to them.
18 Q.
And so she had an account with the FedEx Credit Union,
18
(Witness excused.)
THE COURT: It's fine to take a break now. I
19 oh, throughout '96?
19 think we have done pretty well. Ladies and gentlemen,
20 A.
Yes, sir.
20 we're going to take our lunch break, let you come back at
21 Q.
'97, '98, '99, all the way up to 2001, correct?
21 1:30. Do not discuss the case among yourselves. Don't
22 A.
Yes, sir.
22 let anybody talk with you about the case. Of course, if
23 Q.
Did she have any savings account?
23 anybody tries to, report that immediately to one of our
24 A.
Yes.
24 court security officers or a member of my staff or me. As
25 Q.
Did she have any mortgages with the company?
25 usual, don't speak to the parties or the lawyers in the
362
361
case and, of course, don't do any research. Don't read
2 anything or look up anything that might be about this case
2 bench.)
3 or cases like it, and continue to keep an open mind.
3
4
4 instructions? I thought you asked if we had a disk
It's a short -- it's not that long of a lunch
MR. BECRAFT: When I asked about jury
5 break, so, of course, you can -- there are a number of
5 available -- I have got a disk of our requested
6 places to eat, and you're probably familiar with those
6 instructions.
7 already. You can go north on the mall and south, there's
7
THE COURT: Did you give them to us?
8 nothing really close, except the cafeteria. There are
8
MR. BECRAFT: I turned in my -- I have got it
9 lots of places about four or five blocks south and about
9 with me.
10 three and a half, four blocks north. We will see you at
10
11 1:30.
11 guarantee you I won't use it. You should have given it to
THE COURT: If you don't ever give it to me, I
12
(Lunch recess taken at 12:30 to 1:35 p.m.)
12 me at the beginning of the case.
13
THE COURT: If we have got everybody, we can
13
MR. BECRAFT: I filed my jury instructions last
14 bring them in.
14 Friday. They were filed.
15
(Jury in at 1:35 p.m.)
15
THE COURT: Okay. Well --
16
MR. MURPHY: Judge, I want to alert the court,
16
MR. BECRAFT: If you want the disk -- I
17 I think we will be done with the government's proof today.
17 delivered it to chambers.
18
18
THE COURT: I understand. I have already
THE COURT: Don't worry about it. I have got
19 started making plans on that.
19 the other two materials, if you will hand the disk to Ms.
20
20 Saba, she will take care of it.
MR. BECRAFT: The court -- I asked a couple of
21 weeks ago --
21
22
22 court.)
THE COURT: Let's come to side bar if we're
23 going to talk about it.
23
24
24 witness be?
MR. BECRAFT: Just real quick for the benefit
25 of the court.
25
THE COURT: Mr. Murphy, who will our next
MR. MURPHY: Our next witness is Mr. Alex
DIRECT - ALEXANDER RIVERA
364
363
ALEXANDER RIVERA,
Trivino.
2
THE COURT: Mr. Trevino, if you would step to
3 the podium and raise your right hand, please. That's it
4 right there. Do you swear that the testimony you are
5 about to give in this case will be the truth, the whole
5
6 BY MR. MURPHY:
7
7 Q.
Sir, would you state your name, please?
8 Trevino, it's Rivera.
8 A.
Alexander Rivera.
9
THE COURT: Well, good. I'm glad
9 Q.
10
MR. MURPHY: I'm sorry, Mr. Rivera.
10 court reporter?
11
THE COURT: Mr. Rivera, do you also make that
11 A.
Sure. A-L-E-X-A-N-D-E-R R-I-V-E-R-A.
12 Q.
And who do you work for, Mr. Rivera?
THE WITNESS: I do, but my last name isn't
12 oath?
DIRECT EXAMINATION
13
THE WITNESS: Yes, I do.
13 A.
CUNA Mutual Mortgage Corporation.
14
THE COURT: I think they said Trevino, maybe
14 Q.
And what is that located?
15 I'm wrong about that.
15 A.
That is in Madison, Wisconsin.
16
16 Q.
Okay. And what business is C-U-N-A in?
17 down wrong.
17 A.
It's a -- CUNA Mutual Mortgage is a servicing
18
THE COURT: Tell me your name again.
18 corporation.
19
THE WITNESS: Alex Rivera.
19 Q.
Okay. And what is a servicing corporation?
20
THE COURT: Spell that last name. I will let
20 A.
We fund loans and we service those loans for investors.
MR. MURPHY: Judge, I did. I had it written
21 you get up here and we'll write it down.
21
THE COURT: Just for our sake, I'm going to
22
THE WITNESS: It's R-I-V-E-R-A.
22 make sure I have got the spelling on the name of the
23
23 corporation down.
24
24
THE WITNESS: It's C-U-N-A, CUNA.
25
25
THE COURT: CUNA, okay.
366
365
THE WITNESS: It stands for Credit Union
what is that form?
2 National Association.
2 A.
That's mortgage interest statement, a form 1098.
3
3 Q.
And who is it addressed to?
4 A.
It's addressed to Vernice B. Kuglin.
5 mortgages, do you keep records of the amount of mortgage
5 Q.
How do you spell her name on the form?
6 interest payment?
6 A.
V-E-R-N-I-C-E B. Kuglin is K-U-G-L-I-N.
7 A.
Yes, we do.
7 Q.
Does that show that Ms. Kuglin paid mortgage interest
8 Q.
And did you bring some documents with you today?
8 in the year 2000?
9 A.
Yes, I did.
9
10 Q.
Could you give me those documents?
10 right, Kuglin, we keep promising to do that. We will try
4 Q.
As part of your company's activities as a servicer of
THE COURT: We're all going to work to get it
11
MR. MURPHY: Thank you, sir.
11 to get it right. It is not always obvious.
12
MR. BECRAFT: We won't have objections to these
12 A.
Yes.
13 exhibits, Your Honor, for this witness, and perhaps we
13 Q.
And what amount was the mortgage interest?
14 ought to put one sticker on all of them.
14 A.
It is for $5,382.58 for the year 2000.
15
15 Q.
Do you have a form for the year 2001?
16 government.
16 A.
Yes.
17
17 Q.
And what's the amount of the mortgage interest?
18 making it a cumulative exhibit.
18 A.
$12,618,47.
19
19
THE COURT: That's -- whatever suits the
MR. MURPHY: Judge, I have no objection to
THE COURT: Cumulative Exhibit 23, that's how
MR. MURPHY: Judge, at this time we would move
20 we're going to do it.
20 this into evidence as collective exhibit 23.
21
MR. MURPHY: Or collective.
21
THE COURT: Received as 23.
22
THE COURT: Collective.
22
23
23 questions.
24 Mortgage Documents.)
24
25 Q.
25
Sir, I'm passing you a form that -- for the year 2000,
CROSS EXAMINATION
CROSS - ALEXANDER RIVERA
CROSS - ALEXANDER RIVERA
368
367
BY MR. BECRAFT:
Honor?
2 Q.
2
3 much interest had been paid by Ms. Kuglin for these two years.
3
4 Can I ask you some questions about your general records?
4 questions of the witness.
5 A.
Sure.
5
6 Q.
Okay. Did your company, what, buy a mortgage that was
6 very much. We will let you step down.
Briefly, you brought a number of records to show how
THE COURT: All right. Mr. Rivera, thanks they
7 on some real property that was owned by Ms. Kuglin?
7
(Witness excused.)
8 A.
That's correct.
8
THE COURT: Who is our next witness?
9 Q.
All right. And do you have a judgment or recollection
9
MR. MURPHY: It is going to be Jeanne Griffis
10 as to when that happened?
10 with First Tennessee, Your Honor.
11 A.
The date of the loan is July of 2000.
11
12 Q.
And how much was the note that you bought?
13 A.
I believe it was 156,000.
13 to give the court and jury will be the truth, the whole
14 Q.
And so some other company had mortgaged the property
15 and then your company comes along and buys that for a hundred
15
THE WITNESS: I do.
16 and fifty thousand?
16
17 A.
A hundred and fifty-six.
17
18 Q.
And that happened in June of 2000?
18
19 A.
July.
19
20 Q.
July of 2000. And is it still currently a valid
20
21 mortgage?
21
22 A.
Yes.
22
23 Q.
Still in effect?
23
24 A.
Yes.
24
25
MR. BECRAFT: All right. Nothing further, Your
25
DIRECT - JEANNE GRIFFIS
DIRECT - JEANNE GRIFFIS
370
369
JEANNE GRIFFIS,
A.
Yes.
2 Q.
Now, you weren't able to get 1098s on those loans?
3 A.
Correct.
4 Q.
Was that interest income reported to the IRS?
5
5 A.
Yes, it is.
6 BY MR. MURPHY:
6 Q.
Now, I'm going to pass you what we're going to mark as
7 Q.
7 a collective exhibit, Collective Exhibit 24, and can you tell
8 A.
Jeanne Griffis.
8 me what these documents are?
9 Q.
And would you spell your first name and last name for
9 A.
DIRECT EXAMINATION
This is a personal statement. They're personal
10 statements, all of them for Vernice Kuglin that shows the
11 A.
J-E-A-N-N-E G-R-I-F-F-I-S.
11 assets and liability of the customer.
12 Q.
Who do you work for, ma'am?
12 Q.
And did those come from the loan documents?
13 A.
First Tennessee Bank.
13 A.
Yes.
14 Q.
And what is your job at First Tennessee Bank?
14 Q.
Okay. And those were made in connection with the
15 A.
I'm manager of legal services and ten compliance
15 loans?
16 departments.
16 A.
17 Q.
And are you the records custodian?
17
18 A.
Yes, I am.
18 marked as a collective exhibit.
19 Q.
Now, some inquiry was made about whether a Vernice B.
19
20 Kuglin had some loans with First Tennessee Bank.
20
21 A.
Yes.
21 Loan Documents.)
22 Q.
Okay. Did you check the records?
22
23 A.
Yes, I did.
23 questions for Ms. Griffis.
24 Q.
Okay. Now, were there loans that she had with First
24
25 Tennessee Bank?
25
Yes.
THE COURT: All right. Cross examination?
CROSS EXAMINATION
CROSS - JEANNE GRIFFIS
CROSS - JEANNE GRIFFIS
372
371
THE COURT: Thank you very much.
BY MR. BECRAFT:
2 Q.
Ms. Griffis, does your bank at the present time have a
2
(Witness excused.)
3 mortgage on any property of Ms. Kuglin?
3
4 A.
I don't know.
4
MR. MURPHY: John Scobey, Your Honor.
5 Q.
All right. Are you familiar with some property called
5
THE COURT: If you would step to the podium,
6 One Main South?
6 please, and raise your right hand.
7 A.
No.
7
8 Q.
How about 802 at Waterford Plaza condominium?
8 please? Do you solemnly swear the testimony you are about
9 A.
No, I would not be familiar with those properties.
9 to give the court and the jury will be the truth, the
10 Q.
Has your bank at any time in the past, say, like, since
10 whole truth and nothing but the truth, so help you God?
THE CLERK: Will you raise your right hand,
11 1990 forward held any mortgage on property owned by Vernice
11
THE WITNESS: I do.
12 Kuglin?
12
13 A.
The mortgage is a separate entity. The mortgage
13
14 company is separate from the bank. Now, we had several loans
14
15 for Ms. Kuglin, but whether they were secured as a second
15
16 mortgage, without looking at them, I can't tell you.
16
17 Q.
17
Okay. The only thing that you know about as manager of
18 legal services are these applications that we have just
18
19 submitted, right?
19
20 A.
20
Well, I know there are loans for Ms. Kuglin or there
21 were loans, yes.
21
22
22
23
23
24
24
25 further questions.
25
DIRECT - DAVID SCOBEY
DIRECT - DAVID SCOBEY
374
373
DAVID SCOBEY,
of years where you got a summons from the Internal Revenue
2 Service requesting records having to do with Ms. Kuglin's
3 property?
4 A.
Yes, we did. I believe it was in October of 2001.
5
5 Q.
Okay. And did you call Ms. Kuglin about those records,
DIRECT EXAMINATION
6 BY MR. MURPHY:
6 about that documents request, rather?
7 Q.
7 A.
8 A.
David Scobey.
8 her know that we had got a summons or subpoena and that I
9 Q.
And would you spell your first and last name, please,
9 thought we would have to comply.
10 Q.
10 sir?
I called Ms. Kuglin just simply as a courtesy to let
Okay. And what did Ms. -- what was Ms. Kuglin's
11 A.
David, D-A-V-I-D. Last name Scobey, S-C-O-B-E-Y.
11 response to that?
12 Q.
And who do you work for, sir?
12 A.
13 A.
Henry Turley Company.
13 the summons was faulty or not valid and that she would have
14 Q.
Mr. Scobey, do you go by the name of John?
14 her lawyer contact me to, you know, to give his opinion on the
15 A.
I do go by the name of John.
15 matter.
Her response was that she was under the opinion that
16
THE COURT: That's confusing to me.
16 Q.
Okay. Did she indicate whether you had to comply with
17
THE WITNESS: Well, that's my middle name.
17 the subpoena?
18 David J.
18 A.
19 Q.
19 would not have to comply.
Mr. Scobey, have you had some dealings with an
Just that it was her opinion that it was faulty and I
20 individual named Vernice Kuglin?
20
MR. MURPHY: Okay. One second, Your Honor.
21 A.
Our company has.
21
No further questions, Your Honor.
22 Q.
And specifically why has your company had dealings with
22
23 Ms. Kuglin?
23
CROSS EXAMINATION
24 A.
We sold her a condominium unit down on South Main.
24 BY MR. BECRAFT:
25 Q.
Did there come a point in time within the last couple
25 Q.
Mr. Scobey, the relationship between, is it the Turley
CROSS - DAVID SCOBEY
376
375
Company?
A.
That's correct.
2 A.
The Henry Turley company.
2 Q.
3 Q.
The Henry Turley Company. At one time that company
3 this particular transaction, the purchase from Mr. Turley by
So you have a number of records that would relate to
4 owned some property on South Main?
4 her of that unit that she bought in '93?
5 A.
5 A.
Correct.
6 but Henry Turley, our shareholder, does.
6 Q.
And so in October of 2001, somebody from the IRS got in
7 Q.
And it's a two-story building out here on Main Street?
7 touch with you and delivered a summons wanting all of the
8 A.
That's correct.
8 financial records regarding Mr. Turley's association or Turley
9 Q.
A couple of blocks down from this courthouse?
9 Company's association with Ms. Kuglin, is that correct?
10 A.
Correct.
10 A.
That's correct.
11 Q.
Somewhere around '92, '93, is that about the time frame
11 Q.
Did you meet Ms. Deborah White on that occasion?
12 in which Mr. Turley sold or conveyed some interest in the
12 A.
I did.
13 property to Ms. Kuglin and her son, Christopher?
13 Q.
Was she the party that delivered the summons to you?
14 A.
14 A.
She was.
15 to Ms. Kuglin.
15 Q.
Okay. I take it your company has done this in the
16 Q.
16 past? You know, the IRS comes along and asks for some
It did. It still does. Actually, the company doesn't,
It was in March of '93, we sold a unit in a condominium
And so since that time, there have been periodic
17 payments made by either Ms. Kuglin or her son regarding the
17 information, right?
18 amounts that would be owed to Mr. Turley for the purchase of
18 A.
Well, in my fifteen years, this was the first time.
19 that property?
19 Q.
How often have you talked to Ms. Kuglin since she has
20 A.
20 bought this property from Mr. Turley?
She had a promissory note at the closing, which she has
21 subsequently paid off, and since then, they have been paying
21 A.
22 condominium maintenance fees to the condominium association,
22 very infrequent.
23 which we manage.
23 Q.
Would it relate to this property?
24 Q.
24 A.
It related to this property.
25 Q.
Did she ever make any comments to you about taxes?
Well, the condominium, basically? It's a two-story
25 building, and the top story is all hers, right?
I've probably spoken to her two or three times. It's
378
377
A.
phone, did you provide a copy of that summons to Ms. Kuglin
No.
2 Q.
She has never discussed her position with you about
2 before you talked to her about it?
3 federal income taxes?
3 A.
I don't recall.
4
MR. MURPHY: Judge, I object to hearsay.
4 Q.
Okay. Well, is it likely that you -- or is it more
5
THE COURT: Objection sustained.
5 likely that you did not give her a copy of it?
6 Q.
Now, on this particular occasion, when Ms. White
6
MR. MURPHY: Judge, I'm going to object to the
7 delivered the summons to you in October of 2001, you read the
7 question because I think the witness has said he doesn't
8 summons over, correct?
8 know.
9 A.
I did.
9
THE COURT: Well --
10 Q.
And do you have an in-house lawyer in the company?
10
MR. BECRAFT: I'll withdraw it, Your Honor.
11 A.
No, no.
11
THE COURT: Beyond the personal knowledge --
12 Q.
Do you have private counsel?
12 well, he has already said what he had to say about that.
13 A.
Yes, we do.
13 Objection sustained.
14 Q.
Once of the first things you did when you received the
14 Q.
And when you picked up the phone and called Ms. Kuglin,
15 summons, you picked up the phone and called Ms. Kuglin?
15 you said, in essence, that a summons had been requesting
16 A.
That's correct.
16 certain financial information from the Turley Company, right?
17 Q.
And she had a position?
17 A.
That's correct.
18 A.
She did.
18 Q.
And you informed her that it was the IRS that was
19 Q.
And she believed -- at that point in time, had she seen
19 wanting it, right?
20 the summons?
20 A.
I did.
21 A.
I have no idea.
21 Q.
And she told you that -- did you tell her much about
22 Q.
Well, the amount of times -- was the summons delivered
22 the facts of the summons, how it was delivered to you, what it
23 to you personally?
23 requested?
24 A.
It was.
24 A.
25 Q.
Okay. And did you provide -- before you picked up the
25 indicated that similar documents had been delivered to others.
I don't remember that I did tell her very much. She
380
379
Q.
THE COURT: That's no problem.
Okay. And she did tell you that she had a lawyer that
2 would respond, is that correct?
2
3 A.
3 Special Agent Debbie White.
That he would give his opinion to me on why that she
MR. MURPHY: Your Honor, the government calls
4 didn't feel that I had to comply.
4
5 Q.
Okay. And do you know who this lawyer was?
6 A.
I believe his name was Baxley.
6 to give the court and the jury will be the truth, the
7 Q.
From Florida?
7 whole truth and nothing but the truth, so help you God.
8 A.
I don't recall.
8
9 Q.
Okay. Do you recall having received at some time
9
10 shortly after or within a reasonable time after October of
10
MR. BECRAFT: May it please the court, can I
11 2001, that Mr. Baxley, in fact, contacted you and sent you
11 take up one matter right now at side bar?
12 something about the summons?
12
13 A.
13 first name is?
He did send me a letter.
THE COURT: Sure. I'm going to ask you your
14
14
THE WITNESS: Deborah, D-E-B-O-R-A-H, White,
15
15 W-H-I-T-E.
16 further questions of Mr. Scobey.
16
17
17
THE COURT: Thank you. We will let you step
18 bench.)
18 down.
19
(Witness excused.)
19
MR. BECRAFT: This is not something we
20
20 necessarily called to the attention of the court, but, you
21
MR. MURPHY: Our next witness is going to be
21 know, I haven't formally invoked the rule, but --
22 Special Agent Deborah White, but I need to let a witness
22
MR. MURPHY: This is the last witness.
23 go.
23
MR. BECRAFT: I know, but that's -THE COURT: The rule has now been invoked, it
24
THE COURT: Okay.
24
25
MR. MURPHY: If I could have one minute.
25 wasn't invoked earlier by anybody. Now, it is invoked.
DIRECT - DEBORAH WHITE
382
381
DEBORAH WHITE,
MR. BECRAFT: Okay. I was told by Ms. Kuglin,
2 the red headed lady in the back of the courtroom may be a
3 witness.
4
MR. MURPHY: I'm not going to call her.
5
MR. BECRAFT: Oh, you're not?
5
6
MR. MURPHY: I'm not going to call her.
6 BY MR. MURPHY:
7
MR. BECRAFT: Sorry, Your Honor. That's okay.
7 Q.
Ma'am, would you state your name, please?
8
8 A.
Deborah White. It's D-E-B-O-R-A-H W-H-I-T-E.
9 court.)
9 Q.
Who are you employed by, Ms. White?
10
10 A.
I'm employed by the Internal Revenue Service, criminal
11
11 investigation.
12
12 Q.
In what capacity?
13
13 A.
I'm a special agent.
14
14 Q.
And how long have you been a special agent with the
15
15 Internal Revenue Service?
16
16 A.
17
17 years.
18
18 Q.
19
19 Ms. Kuglin's tax situation?
20
20 A.
Yes, I was.
21
21 Q.
Okay. And did you do a calculation to determine
22
22 whether any income taxes were due and owing?
23
23 A.
Yes, I did.
24
24 Q.
Okay. Now, in order to do that calculation, what
25
25 records did you use?
DIRECT EXAMINATION
I have been a special agent for about nine and a half
Okay. Now, were you involved in the investigation of
384
383
A.
I used the IRP documents which contained -- and
copy.
2 summoned records that we got from Federal Express and Kemper
2
3 National Services, and that's basically it. Well, the
3 they have got, and we might use the letter size also as an
4 mortgage interest that she was paid -- or that she paid.
4 extra exhibit, so that we can more easily fit it in the
5 Q.
5 record.
And some of the -- did you get the mortgage interest
THE COURT: Well, I'll let them use the form
6 figures off of some of the 1098s that you were able to get and
6
7 some of it off the IRPs?
7 one for the jury to see, they kind of have to go like
8 A.
8 that.
Right. I got most of the information off the IRPs.
MR. MURPHY: The problem with the letter size
9
THE COURT: I understand. That's no problem.
10 easel up, we have got a calculation.
10
MR. MURPHY: It is kind of a long deal. Okay.
11
THE COURT: That's fine.
11
THE COURT: That may need to be lifted up. And
12
MR. MURPHY: If the witness could come down.
12 there is a way to do that. I tell you what, though, would
13
THE WITNESS: And bring your papers with you.
13 you move it around so it is a little more in the corner so
14
THE COURT: It's okay also if you want to use
14 that I can see it and everybody has a shot at seeing it?
9
MR. MURPHY: Your Honor, if we could set the
15 the overhead, whichever you want -- okay, you have got it
15 And why don't we put the letter size one on the overhead,
16 on chart, that's fine.
16 anyway, if we have got one, counsel.
17
17
18 overhead, but making it all fit is kind of hard.
18
THE COURT: Mrs. Saba, we want the letter sized
19
19 one on the overhead also.
MR. MURPHY: Judge, we would have put it on the
THE COURT: That's no problem at all. But we
20 do have to let defense counsel have a chance to come
20
21 around to see.
21 we're going to show it to the panel.
22
22
MR. BECRAFT: I have looked at it already, Your
And we probably ought to give it a number if
MR. MURPHY: Judge, what if we numbered the
23 Honor.
23 panels two separate numbers and make that a third number.
24
THE COURT: Okay.
24
THE COURT: It will be 25, 26, 27.
25
MR. BECRAFT: I do believe I have a letter size
25
386
385
self-employment tax, stuff like that.
Chart.)
2
2 Q.
And what was the adjusted gross income?
3 Chart.)
3
4
4 screen. I tell you what, I'm going to take a two or
THE COURT: You have the wrong one on the
5 Paper Copy of Charts.)
5 three-minute break, let y'all take a real short break, let
6
6 these folks get a little more organized and we will come
7 Q.
THE COURT: The charts are 25 and 26.
Now, Ms. White, are these two panels that we have
7 back. Thank you.
8 marked Exhibits 25 and 26, are these blowups of the tax
8
9 calculation you prepared?
9
THE COURT: It's really easier for some jurors
10 A.
Yes, sir, they are.
10 to see the screen no matter where we put the overheads.
11 Q.
Let's start with this one first. Now, for 1996, the
11 So that also lets me see it. I have a lot of trouble
12 year 1996, what did you compute Ms. Kuglin's wages as?
12 seeing that far, just to be honest.
13 A.
For 1996?
13
14 Q.
Yes, ma'am.
14 these cases again, I'll do tax computations for everybody
15 A.
The wages that she received were from Federal Ex --
15 in the courtroom, and we could --
MR. MURPHY: I think if I ever have one of
16 Federal Express, and they were in the amount of $183,408.01.
16
17 Q.
17 just knew we needed to give you a break so we wouldn't
And what was the total of all wages she received in
THE COURT: Oh, this is fine. This is fine. I
18 1996?
18 have everything falling down.
19 A.
$183,408.01.
19
MR. MURPHY: I apologize.
20 Q.
And were there any adjustments to the income?
20
THE COURT: No problem. I think we're ready to
21 A.
No, there were not.
21 go, Mr. Tuggle.
22 Q.
What are adjustments to income?
22
23 A.
Adjustments to income are those items on the front of
23 jurors can see it a little bit? It think we're where
Are you going to move that other chart so the
24 the return. They primarily deal with, like, for self-employed
24 people can see now, and that's better.
25 people where you get a credit for like half a year
25
You have a monitor over there too?
388
387
MR. BECRAFT: Yes. I don't need to look at
Q.
Was there some formula you used to determine that?
2 that, I have a hard copy.
2 A.
3
3 out after a certain income level, and so in your 1040 tax
THE COURT: I understand, I understand. I
Yeah, just the -- the itemized deductions are phased
4 think we're all set, Mr. Tuggle.
4 booklet, there's like a little calculation sheet that you use,
5
COURT SECURITY OFFICER: All right, Judge.
5 you know, it just kind of gives you the formula for
6
6 determining what your deduction would be.
7
THE COURT: I hope y'all appreciate it, when
7 Q.
And did you use that to determine the amount of
8 somebody can't see very well, nothing is more frustrating
8 itemized deductions for '96, that little chart?
9 for me than to try to see something and I can't see it.
9 A.
Yes, I did.
10 So hopefully you're all able to see things now, it is real
10 Q.
Okay. And did you also determine the amount of the tax
11 important, and I think we're ready to proceed.
11 exemption for Ms. Kuglin?
12
12 A.
13 Q.
Now, Ms. White, we were going through the tax
Yes, I did. Her exemption -- we gave her one exemption
13 for herself, and the exemption amount was $1,173.
14 calculation, and basically, we're talking about what has been
14 Q.
Did you also use some formula that was provided in the
15 marked as Exhibit 25, and the 1996 year, what was the adjusted
15 1040 tax manual to determine the amount of exemption?
16 gross income you came up with for that year?
16 A.
17 A.
The adjusted gross income for 1996 was $183,408.01.
17 income.
18 Q.
And did you determine whether Ms. Kuglin was entitled
18 Q.
Yes, it it's the same type formula that's based on your
Okay. Now, going over to -- if we could put chart two
19 to any itemized deductions?
19 on the screen. For 1996, what was the corrected taxable
20 A.
On the itemized deductions, yes.
20 income?
21 Q.
Okay.
21 A.
For 1996, her corrected taxable income was $162,883.75.
22 A.
I concluded that.
22 Q.
And what was -- did you compute the tax?
23 Q.
Okay. And what was the amount of those itemized
23 A.
Yes, I did.
24 deductions?
24 Q.
And what was the tax?
25 A.
25 A.
The tax was $47,708.65.
The amount of those itemized deductions was $19,351.26.
390
389
Q.
Okay. In 1996, what was the amount of income that
Q.
Now, were there any taxes withheld from FedEx in '96,
2 triggered the filing requirement?
2 according to your investigation?
3 A.
3 A.
In 1996?
4 excess of $6,550 in order to have a requirement to file a
4 Q.
Yes, ma'am.
5 return.
5 A.
No, sir.
6 Q.
And what is gross income?
6 Q.
Okay. Going over -- now, one more thing before we go
7 A.
Gross income, it's basically all items of income from
7 to the next year, on your initial computation, was there a
For 1996, you had to have gross income equal to or in
8 whatever source derived.
8 mistake made?
9 Q.
Okay.
9 A.
10 A.
All monies.
10 talk --
11 Q.
Now, in order to trigger the filing requirement -- the
11 Q.
Sure.
12 filing requirement, do you -- before you determine, do you
12 A.
-- kind of how the process we go through?
13 subtract the deductions and all that?
13 Q.
Yes, sir.
14 A.
I'm sorry, go ahead.
14 A.
When we recommend prosecution when we work our
15 Q.
The filing requirement, the minimum dollars that
15 investigation, we go out and gather the facts. If it deems
When I initially prepared our -- can I back up and
16 require filing --
16 that prosecution is warranted, we write up a prosecution
17 A.
Uh-huh.
17 report and attach -- which is just a long narrative report
18 Q.
-- that's for what?
18 that reports what our findings are. Attached to that would be
19 A.
That's your gross income.
19 the exhibits which are, you know, items, bank records, stuff
20 Q.
Okay. Okay. And that's --
20 like that that we get throughout the investigation that help
21 A.
Your gross income should be equal to or greater -- if
21 prove our case. Anyway, we put them all together in a binder,
22 it's equal to or less than that.
22 and we have an agent in -- for Memphis, he's actually located
23 Q.
Less than what?
23 in Arkansas, he reviews all our cases, and does our
24 A.
Than the $6,550, then you're not required to file a tax
24 calculations and makes sure that everything is correct, and at
25 return.
25 that point, I had actually made an error on my, I think it was
392
391
my exemption chart, I was supposed to round up, and I didn't
$172,674.37.
2 round at all. So that made a difference like in the taxable
2 Q.
3 income and all that. So he sent it -- when it came back to
3 deductions?
4 me, I corrected it. These are the correct numbers, but I
4 A.
Yes, I did.
5 forgot when I printed out the new worksheets, I didn't swap
5 Q.
In what amount?
6 them out in the exhibits. So these are the correct numbers.
6 A.
$23,137.77.
7 And when my case went forward, it had the incorrect
7 Q.
Were her itemized deductions limited because of her
8 calculation on the exhibits. And I think the incorrect
8 income or anything like that?
9 numbers were actually provided to the defense during the
9 A.
Right, right.
10 discovery process, and we -- before we realized that I hadn't
10 Q.
Okay. Did you also give her an exemption?
11 swapped them out. That's kind of the error.
11 A.
Yes, I did. It totaled $1,537.
12 Q.
But that error was corrected?
12 Q.
Okay. And what was her corrected taxable income?
13 A.
Yes.
13 A.
$147,999.60.
14 Q.
Okay. Let's talk about 1997. What wages based on your
14 Q.
If we could go to page two, what was the corrected
Okay. And did you give her credit for itemized
15 investigation did Ms. Kuglin have before in 1997, and we're on
15 taxable income for 1997?
16 chart one.
16 A.
$147,999.60.
17 A.
17 Q.
And what was the tax per the tax rate schedule?
18 she received from Federal Express. Her wages for the year
18 A.
$42,050.36.
19 were $172,674.37.
19 Q.
And that's -- what bracket was Ms. Kuglin in, in terms
20 Q.
Okay. And what was her corrected total income?
20 of was she single or head of household?
21 A.
That same amount, $172,674.37.
21 A.
Single.
22 Q.
Were there any adjustments to her income?
22 Q.
Single. Based on your investigation, did she have any
23 A.
No, sir.
23 dependents at the time?
24 Q.
What was her adjusted gross income at that point?
24 A.
No.
25 A.
Her adjusted gross income was the same amount,
25 Q.
Okay. Now, in 1997, what was the minimum amount of
Okay. Her wages for 1997 consisted of her W-2 wages
394
393
income that triggered a filing requirement?
A.
$1,728.
2 A.
$6,800.
2 Q.
3 Q.
Let's go over to 1999, page one of the chart. Did Ms.
3 Kuglin's corrected taxable income for 1998?
If we could shift over to page two. And what was Ms.
4 Kuglin -- Ms. Kuglin receive wages from Federal Express?
4 A.
Her corrected taxable income was $137,197.93.
5 A.
Yes, she did.
5 Q.
Did you determine what the amount of tax would be on
6 Q.
And what was the amount of the wages?
6 that amount?
7 A.
For 1998?
7 A.
8 Q.
Yes, ma'am.
8 determined that it was $37,000 -- $37,848.75.
9 A.
The wages from FedEx were $164,196. She also received
9 Q.
Yes, I did. I used the tax rate schedule and
Okay. And did Ms. Kuglin receive any credits for taxes
10 that short-term disability pay from Kemper National Services
10 that were withheld?
11 in the amount of $4,789.37.
11 A.
12 Q.
And what was her total adjusted gross income?
12 with Kemper, when Kemper paid her, they withheld taxes from
13 A.
$168,985.37.
13 her disability benefit in the amount of $1,341.03, and I
14 Q.
And what were the amount of itemized deductions that
14 subtracted that.
Yeah, I credited back the -- when she filed the claim
15 she received credit for?
15 Q.
And what was the amount of tax due and owing per 1998,
16 A.
$30,059.44.
16 according to your calculation?
17 Q.
And were those -- the amount of those deductions
17 A.
It was $36,507.72.
18 limited?
18 Q.
And I might have asked this already, what was the
19 A.
Yes.
19 income level that triggered the filing of a tax return in
20 Q.
And did you use the tax calculation table for that?
20 1998?
21 A.
Yes, I did.
21 A.
$6,950.
22 Q.
Let's talk about her exemption, how many exemptions did
22 Q.
If we could go to page one again. I would like to talk
23 she get for 1998?
23 now about 1999.
24 A.
Just one for herself.
24 A.
Uh-huh.
25 Q.
And what was the amount of that exemption?
25 Q.
Did Ms. Kuglin receive any wages in 1999?
396
395
A.
In 1999, she received W-2 wages from Federal Express in
Q.
And what was your computation of the tax due and owing?
2 the amount of $172,428.80.
2 A.
The tax due and owing was $41,032.30.
3 Q.
Okay. And were there any adjustments to her income?
3 Q.
If we could go back to page one, please. Did Ms.
4 A.
No.
4 Kuglin receive wages in 2000?
5 Q.
What was her adjusted gross income then?
5 A.
6 A.
$172,428.80.
6 in the amount of $191,292.99.
7 Q.
And did she receive -- did you give her credit for
7 Q.
And what was her corrected total income then?
8 itemized deductions?
8 A.
Her corrected total income was $164,000 --
9 A.
Yes, I did, in the amount of $24,152.14.
9 Q.
No, this is for 2000.
10 Q.
Were those deductions limited because of her income?
10 A.
I'm sorry, her corrected total income, I'm sorry,
11 A.
Yes.
11 $191,292.99.
12 Q.
Okay. And did you give her an exemption?
12 Q.
And what was her adjusted gross income?
13 A.
Yes, I did. For 1999, she got $1,705 as a personal
13 A.
Her adjusted gross income was the same amount.
14 exemption.
14 Q.
Did you allow her any itemized deductions?
15 Q.
And was that limited because --
15 A.
Yes, again, we allowed her the itemized deductions for
16 A.
Because of the amount of income.
16 her mortgage interest that she paid in the amount of
17 Q.
-- of the amount of income?
17 $25,668.71.
18 A.
Uh-huh.
18 Q.
19 Q.
If we could go over to page two. For 1999, what was
19 the --
Yes, she did. Again, they were just wages from FedEx
And were those deductions limited by the tax table or
20 Ms. Kuglin's corrected taxable income?
20 A.
Yes.
21 A.
Her corrected taxable income was $146,571.66.
21 Q.
Or by her income, rather?
22 Q.
What was her tax per the tax table?
22 A.
By her income.
23 A.
Per the tax rate schedule?
23 Q.
And did you -- did she receive credit for an exemption?
24 Q.
Yes, ma'am.
24 A.
Yes, she did. In 2000, her personal exemption was
25 A.
It was $41,032.30.
25 $1400.
398
397
Q.
And, again, was that limited by her income?
Q.
And was she credited with a personal exemption?
2 A.
Uh-huh.
2 A.
Yes, her personal exemption for 2001 was $1,508.
3 Q.
Now, if we could go over to page two. What was her
3 Q.
What was her corrected taxable income?
4 corrected taxable income for 2000?
4 A.
$161,189.07.
5 A.
For 2000, it was $164,224.28.
5 Q.
If we could go over to page two. For 2001, what was
6 Q.
And what was the tax per the tax rate schedule?
6 Ms. Kuglin's corrected taxable income? Again, I'm going right
7 A.
$47,171.74.
7 down the chart?
8 Q.
And what was the tax due and owing based on your
8 A.
$161,189.07.
9 calculation?
9 Q.
And what was her tax per the tax rate schedule?
10 A.
$47,171.74.
10 A.
$45,036.87.
11 Q.
Okay. And could we go back to page one, please?
11 Q.
What was her -- based on this calculation, what was her
12
Now, referring to 2001, did Ms. Kuglin receive any
12 tax due and owing?
13 wages from FedEx?
13 A.
$45,036.87.
14 A.
Yes, her Federal Express wages totaled $190,673.37.
14 Q.
And other than the Kemper withholding in 1998, was
15 Q.
And what was her corrected total income?
15 there any withholding that reduced her tax liability that you
16 A.
$190,673.37.
16 were able to --
17 Q.
And what was her adjusted gross income?
17 A.
18 A.
$190,673.37.
18
19 Q.
And there were no adjustments to income?
19 Q.
20 A.
No.
20 know the charts are in your way, is she in the courtroom
21 Q.
And what -- was Ms. Kuglin credited with itemized
21 today?
No, there was not.
MR. MURPHY: One second, Judge.
One more thing. The Ms. Kuglin you investigated, and I
22 deductions for 2001?
22 A.
Yes, she is.
23 A.
Yes, she was.
23 Q.
Okay. Where is she seated and what is she wearing?
24 Q.
And what were the amount of those deductions?
24 A.
She is seated between the two gentlemen with an orange
25 A.
$27,976.30.
25 jacket on.
CROSS - DEBORAH WHITE
400
399
MR. BECRAFT: We will stipulate she has
Q.
So by the time you graduated, what, in '85, at the
2 identified her, Your Honor.
2 place in Huntsville, Texas --
3
3 A.
No, I graduated in '90. It was on an extended plan.
4 and that's reflected in the record.
4 Q.
I see. So you went to work for the IRS in '85?
5
5 A.
I went to work for the IRS in '85, and I was in college
THE COURT: The defendant has been identified,
6 questions for Special Agent White.
6 in the evening and --
7
7 Q.
Okay. Good enough. But that was in criminal justice?
8 A.
Right.
9 BY MR. BECRAFT:
9 Q.
You apparently obviously had designs on being a special
10 Q.
Good afternoon, Ms. White.
10 agent, is that correct?
11 A.
Good afternoon.
11 A.
That's correct.
12 Q.
I believe you testified that you had been working with
12 Q.
And -- but your college courses didn't deal anything
8
CROSS EXAMINATION
13 the IRS for the last nine and a half years, correct?
13 with necessarily tax and accounting, did it?
14 A.
14 A.
I have been a special agent for the last nine and a
My -- I mean I took tax and accounting courses at
15 half years. I have been employed with the IRS since 1985.
15 college, if that's what you are talking about.
16 Q.
16 Q.
Okay. Could I get a little bit of your educational
Okay. Good enough. Now, those courses involved going
17 background, please?
17 to like a class in the evening, you said you were -- so you
18 A.
Sure.
18 might go Monday, Wednesday, Friday or Tuesdays and Thursdays
19 Q.
Where did you go to school?
19 or some such, you might go and sit in the class for several
20 A.
College, I have a bachelor's degree from Sam Houston
20 hours, correct?
21 State University in Huntsville, Texas in criminal justice.
21 A.
Right.
22 Q.
Do you have an accounting background?
22 Q.
To learn accounting and tax?
23 A.
I have the accounting classes -- in order to become a
23 A.
Right.
24 special agent with IRS, you have to have a bachelor's degree
24 Q.
Okay. Now, since you have been working for the IRS,
25 and 15 hours of accounting.
25 have you gone to specialized schools that relate to accounting
402
401
and taxes?
Treasury Department and other -- I think the only ones that
2 A.
2 don't go there are FBI agents and DEA agents, the rest of them
When you get hired as a special agent, you attend the
3 federal law enforcement training center down in -- it is in
3 all attend that -- everybody takes that class. And then we
4 Brunswick -- Glynco, Georgia. I was down there for like six
4 had a tax class and then we had -- we finished out with the
5 months.
5 special agent investigative techniques, which is the course
6 Q.
And did you learn more about taxes down there?
6 that teaches you how to do the IRS special agent job.
7 A.
Yeah, that school -- that six-month school, it is split
7 Q.
All right. And since you have been to Glynco, that
8 up into three different schools. One is criminal investigator
8 would be sometime maybe the late 1980s, early 1990s?
9 training, one is tax, and the other is special agent
9 A.
10 investigative techniques.
10 and I got out in June, July.
11 Q.
11 Q.
I want to get an idea about how much study -- you
I got out in -- I went down there in January of '94,
Okay. And since you got out of that course, have you
12 obviously recognize this, I hold in my hand, 1986 Internal
12 had, you know, kind of refresher courses or continuing
13 Revenue Code printed in 1994, right?
13 education courses that relate to tax?
14 A.
Right.
14 A.
15 Q.
And throughout this trial, Mr. Murphy -- oh, no, that's
15 professional education that's put on, by -- in the criminal
We have -- every year, we have a continuing
16 not -- but you had here in the courtroom Internal Revenue
16 investigation area, and we roughly have it every year. I mean
17 codes and other tax information with you, correct?
17 if there's updates that, you know, we need to be, you know
18 A.
Yeah.
18 aware of, or whatever, there would probably be a course
19 Q.
Okay. Now, the courts that you have taken in special
19 presented on that. But generally, the cases that we work
20 agent -- I think you said you went down to Glynco, Georgia and
20 aren't current year cases, they're usually -- we have to give
21 had at least a six-month course on tax?
21 you time to file or not file, or, you know, so it is --
22 A.
22 they're usually prior years.
No, I said that we had -- it was split into three
23 different courses. The criminal investigator training is the
23 Q.
Now, would you disagree with me when I say that the
24 first, you know, five or six weeks, and that basically teaches
24 study of federal income taxes is complicated?
25 you about the law. Basically, all federal agents within the
25 A.
Sure.
404
403
Q.
MR. BECRAFT: She has had training, Your Honor,
Now, in addition to knowing something about -- we don't
2 have your copy of the Internal Revenue Code here, but you use
2 I just simply want to know --
3 books like this in your regular work, right, the Internal
3
MR. MURPHY: You still don't have it off.
4 Revenue Code?
4
MR. BECRAFT: All I wanted to do, Your Honor,
5 A.
Yes.
5 was to show -- I think the jury is entitled to know, she
6 Q.
And it's this thick?
6 has testified similar to an expert, and all I'm doing is
7 A.
I don't know, we have a bunch of them, I don't know
7 trying to draw out how much training she has had on the
8 that we necessarily have that same one.
8 Internal Revenue Code and how complex the law is. I think
9
MR. MURPHY: Your Honor, could we approach?
9 that's fair, because she has drawn legal conclusions, she
10
THE COURT: You may.
10 has testified like an expert.
11
11
THE COURT: What about it?
12 bench.)
12
MR. MURPHY: Judge, I don't think she is
13
13 drawing a legal conclusion. She said I did this
14 cross. I mean how thick the book is and all this stuff,
14 calculation. In fact, I didn't ask her whether Ms. Kuglin
15 he's not asking about the tax calculation.
15 had the file. All I asked was what was the limit that
16
16 year. I mean I --
MR. BECRAFT: She has been tendered as an
17 expert.
17
18
18 limited -- you're outside the scope under 611, that's
THE COURT: She was entered as a special agent
THE COURT: Well, I mean she had fairly
19 with knowledge about how to calculate taxes.
19 pretty fair.
20
MR. BECRAFT: That's what she did, and I --
20
MR. BECRAFT: Okay.
21
THE COURT: You might want to turn your mic
21
THE COURT: And I think we probably ought to go
22 off. But she has not been presented as a legal expert,
22 ahead.
23 has she?
23
24
24
THE COURT: No problem.
25
MR. MURPHY: Well, all she is presented for is
25 to do tax calculation.
406
405
charts. When you compute the taxable income, you took all of
court.)
2
MR. BECRAFT: Can we use the charts or do you
2 these figures here for '96 through 2001, all of these reported
3 need to see something on the screen and ask you questions
3 figures here, they're based on the evidence that we obtained
4 about it?
4 from FedEx, correct?
5
5 A.
Correct.
6 probably not a bad idea to put it on the screen too. The
6 Q.
The 1099s or W-2?
7 screen helps us know for sure where you are. It's a
7 A.
W-2s.
8 little different than the chart. The chart lets you see
8 Q.
Okay. For these years, and these are the figures that
9 it. The screen, you can point out and say this is where I
9 came from there, correct?
10 am, and we can't miss it then.
10 A.
Yeah.
11
11 Q.
Okay. Now, down at bottom after you go through several
THE COURT: You can use the charts. It is
MR. BECRAFT: I think I will stroll over here
12 myself, and can I use my copy?
12 calculations, you have this corrected taxable income and you
13
13 have the various figures for the various years, correct?
14 A.
Yes.
15 how much she owed in the way of taxes, that's the ultimate
15 Q.
And in order to arrive at that figure, you have to use
16 bottom line?
16 the Internal Revenue Code, consult certain sections, is that
17 A.
Correct.
17 correct, Section 61, 62, 63?
18 Q.
And to get there, you have got to calculate how much
18 A.
14 Q.
Now, you drafted this document up in order to calculate
Yeah. Well, actually, you know, this return is just
19 Ms. Kuglin made, correct?
19 itemized deductions and her exemptions, I mean you can get all
20 A.
Right.
20 that information from the tax booklet that they mail to you.
21 Q.
And -- but then in order to arrive at and create this
21 Q.
You have used your overall broad knowledge of tax laws
22 chart, you have to have at least some knowledge, a good
22 in order to devise and create this chart, is that true?
23 working knowledge of the tax laws, correct?
23 A.
Yeah.
24 A.
Yeah.
24 Q.
Okay. But in order to make -- come up with corrected
25 Q.
Now, you have a line here, you know, on one of these
25 taxable income, either from a booklet like the 1040 booklet or
408
407
from the tax code itself, there's an interrelationship between
A.
That's correct.
2 Section 61, 62, 63 to arrive at something called taxable
2 Q.
3 income, correct?
3 liability that is dealt with in this case, right?
4 A.
Uh-huh.
4 A.
Right.
5 Q.
And you also, to deal with the, you know, moving up the
5 Q.
Somehow, some way, we have got to -- there was the
That's an adjustment as to the aggregate ultimate tax
6 line here to adjusted gross income, in order to calculate
6 $1,300 that was withheld in '98. Okay, can you tell us the
7 corrected taxable income, you take adjusted gross income and
7 section of the Internal Revenue Code that would allow somebody
8 you deal with itemized deductions, correct?
8 to have credit for withheld taxes?
9 A.
Correct.
9 A.
10 Q.
And the tax code itself deals with itemized deductions,
10 I don't know the exact code, but I do know this.
You know -- no, off the top of my head, no, I'm sorry,
11 right?
11 Q.
Okay.
12 A.
Okay.
12 A.
That -- she didn't have any wages -- I mean she didn't
13 Q.
And can you tell us off the top of your head -- I think
13 have any federal income tax held withheld from her salary, and
14 you have limited it primarily in reference to this particular
14 so when we do our calculations if we have -- normally, if -- I
15 case, the itemized deductions primarily to interest payments,
15 guess if people file tax returns and maybe they didn't report
16 correct?
16 all their income, we give them credit for the tax that they
17 A.
Right.
17 did pay. So under normal circumstances, we would give them
18 Q.
Off the top of your head, can you tell us what section
18 credit for any taxes that they would have reported and paid on
19 of the code that would relate to taking that as an itemized
19 their return. In this case, there were no returns filed, so
20 deduction?
20 there was no tax paid. The only tax that was actually
21 A.
Off the top of my head, no, I couldn't.
21 withheld was that $1,300 from Kemper.
22 Q.
Now, I'm going to flip over to the other chart here,
22 Q.
All right.
23 the one where you calculate the tax due and owing. Let's take
23 A.
So I'm giving her credit for it.
24 a look at the year 1998, you have taxes withheld of $1,300, is
24 Q.
I understand that, but my question was, it should be a
25 that correct?
25 simple matter, can you tell us with which section deals with
410
409
giving a credit for withheld taxes?
Q.
2 A.
2 A.
Off the top of my head, no, I don't know what -- I mean
Okay.
That says that you must make a return if your gross
3 if I had a question about it, I could look it up, I suppose
3 income exceeds the exemption amount.
4 but, no, I don't have tall of those codes memorized.
4 Q.
5 Q.
5 6001?
How about Section 31, does that kind of refresh your
Now, you mentioned 6011, are you familiar with Section
6 recollection, would that -- credit for tax withheld?
6 A.
Yes.
7 A.
I'm sorry.
7 Q.
Okay. Is it your understanding that at least two laws
8 Q.
Okay. One moment, Your Honor. You have also given
8 that relate to the filing of income tax returns are Section
9 testimony that -- I didn't write them all down, but you --
9 6001 and 6011 of the Internal Revenue Code?
10 when Mr. Murphy was asking you questions, he asked you about
10 A.
Yes.
11 what the threshold amount was for each year for filing?
11 Q.
And did you consult -- in your testimony, when you gave
12 A.
Uh-huh.
12 these figures right here, you know, these are the filing
13 Q.
I wrote them down -- I didn't write them all down, but
13 requirement. Did you actually look up the law to determine it
14 I think you said 6500 or 6550 for 1996.
14 or did you do something like consult an instruction booklet?
15 A.
6550, right.
15 A.
16 Q.
In '97, it was 6800, right?
16 booklet, because it's right there, it is available, you can
17 A.
'96 is 6800.
17 download them off the internet, and, yes, I looked at the
18 Q.
Let's forget all the other figures, but you rattled
18 instruction booklet, but I have since, you know, looked at the
No, actually, we -- I did look at the instruction
19 them all, is that correct?
19 code too.
20 A.
Yes.
20 Q.
21 Q.
Now, is the filing requirement, that provision, do you
21 figures that you used, if you make so much money, if you make
Okay. Do you know whether or not that -- you know, the
22 find it in the law?
22 6500, if you make 6800 in '97 or if you make 6950 in '98,
23 A.
Do you have to file a return?
23 whether or not in Section 6001 or 6011 of the Internal Revenue
24 Q.
Well, yes.
24 Code that you will find that type of information?
25 A.
I mean I think it's 6011.
25 A.
I don't know that it says the exact dollar amount, but
REDIRECT - DEBORAH WHITE
412
411
THE COURT: Thank you. We will let you step
it does say about the exemption and all.
2
MR. BECRAFT: Your Honor, I believe that's all.
2 down.
3
THE COURT: Redirect.
3
4
MR. MURPHY: Your Honor, I don't -- well, since
4
THE COURT: Will there be any other witnesses
5 for the United States?
5 it came up.
6
(Witness excused.)
6
MR. MURPHY: Judge, there'll be no other
7 BY MR. MURPHY:
7 witnesses, and at this point the government rests with the
8 Q.
8 exception we would ask Your Honor to take judicial notice
Would you go through what the dollar amounts were that
9 required filing of the tax return for each of the six years?
9 of the fact that Memphis-Shelby County, Tennessee is
10 A.
10 within the Western Judicial District of Tennessee.
Okay. In 1996, if you were single and under the age of
11 65 and your gross income exceeded $6,550, you were required to
11
THE COURT: I will take judicial notice of
12 file an income tax return.
12 that. Of course, ladies and gentlemen, we can only take
13 Q.
Okay.
13 judicial notice for something that's so obvious that all
14 A.
In 1997, if you were a single person under the age of
14 of us know, and it is obvious that Memphis and Shelby
15 65 and your gross income exceeded $6,800, you were required to
15 County is within the Western District of Tennessee.
16 file a federal income tax return for that year.
16
17
17 ten-minute break, and I'm going to see where we're going
In 1998, for a single person under the age of 65, the
All right. We're going to take about a
18 amount was increased to $6,950. So if your gross income was
18 next, and then we will let you know. So I'm going to take
19 in excess of that -- equal to or in excess of that, you were
19 a ten-minute break, we're going to stay out here and work,
20 required to file an income tax return.
20 and we will let you know at the end where we're
21
21 proceeding. See you in ten minutes.
1999, that amount was increased to $7,050. 2000, that
22 amount was increased to $7,200, and in 2001, the amount was
22
(Jury out at 2:47.)
23 $7,450.
23
THE COURT: Anything from the defense?
24
24
MR. BECRAFT: Yes, Your Honor, under Rule 29
25 questions.
25 real quick, and then we might require maybe about five
414
413
minutes to move some exhibits around and get them in --
it, Your Honor.
2 Ms. Kuglin up there on the stand and then have a way of
2
3 digging out her --
3
MR. MURPHY: Well, Judge, the proof established
4
4 several things. The proof established that she had
THE COURT: Sure. Mrs. Saba, let's move those
5 things out of the center of the well while we're doing
5 taxable income. The proof established that her income was
6 that.
6 above the levels that required filing. The proof in --
7
Yes, sir.
7 and it was one of the exhibits they introduced from
8
MR. BECRAFT: Your Honor, on -- on my motion, I
8 Federal Express that, frankly, we didn't have that and
9 just -- I will make this real short, sweet and simple.
9 FedEx never gave us, but that -- in 1995, she claimed an
10 There are three elements the government has got to prove.
10 exempt status. If you look at the W-4, it -- in order to
11 One is willfulness. You know, this has been an extremely
11 be exempt, you have to be entitled to a refund of all your
12 short case. The government has shown, one, that there was
12 prior year tax liability and -- or all your taxes and
13 a '92 return filed, then there are no returns filed for
13 don't incur any tax liability for the future year. That
14 the years in question. There has been some withholding
14 was not a true statement. Based on the evidence the
15 and then there has been no withholding. We have had proof
15 government put forth, that was not a true statement. Now,
16 regarding what the gross amount of wages were, we just
16 at this point she hasn't made that defense, and once she
17 completed the calculation of the tax, but it seems like to
17 gets up there, we have got to come up with some evidence
18 me that the government has got to have at least a
18 that rebuts it either through cross examination or
19 scintilla of something more to show that she had that evil
19 whatever, but there was also proof she filed in '93.
20 animus, that malignant intent, that bad motive -- I won't
20 There was proof that '92 -- there was proof that notices
21 add any more adjectives, Your Honor, but you know one of
21 have been sent to her, that she had been subject to IRS
22 the things about this case is there is something missing
22 levies. And we would submit, Judge -- granted, it's a
23 regarding intent. And I think that an evasion case has
23 quick case, but the government shouldn't be penalized for
24 got to be stronger than we have seen here. It has been
24 being efficient. And there is also the comment of Mr.
25 all paper, not even a letter from the defendant. That's
25 Scobey that you don't have to comply with the IRS summons.
416
415
THE COURT: Well, certainly, the law and all
2 inferences are taken in favor of the government in the
2
3 context of this motion for this purpose, and the court
3
THE COURT: Bring the jury in.
4 doesn't make any determinations on credibility questions
4
5 or anything like that, and so, therefore, the defense
5
THE COURT: Let me see counsel at side bar.
6 motion is denied.
6
7
7 bench.)
Is the defendant ready to proceed and do you
8 want a couple of minutes?
8
9
9 the -- to any of the ones submitted by defense, the
MR. BECRAFT: If we could have seven or eight,
THE COURT: Do you have any objections to
10 maybe ten minutes, maybe the afternoon break will be
10 instructions?
11 sufficient and then we would have --
11
12
12 talking about the Paperwork Reduction Act and all that,
THE COURT: Go ahead and tell the jury then,
MR. MURPHY: Judge, I have got objections to
13 Mrs. Saba, we're going to take our afternoon break at this
13 because that has been rejected by all the courts
14 time. We are going to come back and we do anticipate the
14 uniformly. I have an objection to the stuff about the
15 defense -- are you going to put on some proof?
15 Anti-Injunction Act because they can go -- they have got
16
MR. BECRAFT: This afternoon, Your Honor.
16 avenues of -- Judge, if you want to stay tonight, I mean I
17
THE COURT: Okay.
17 have got written down what is the problem.
18
MR. BECRAFT: I just need to --
18
19
THE COURT: Only for the purpose of advising
19 quotes from Bishop, are there? I take it that is not a
THE COURT: There's no objection to using
20 the jury.
20 problem.
21
MR. BECRAFT: Yeah.
21
22
THE COURT: And we will come back and there
22 said, I'm stuck with it, Judge.
MR. MURPHY: If that's what the Supreme Court
23 will be some additional testimony, so we will add ten
23
24 minutes to our break, and this is our afternoon break.
24
MR. BECRAFT: Thanks, Judge.
25 See you in ten minutes.
25
418
417
was I swam. It was a culture thing where she didn't want
court.)
2
MR. BECRAFT: May it please the court, the
2 to swear, so we talked about it, and what she wanted to do
3 defendant calls the defendant, Vernice Kuglin.
3 was affirm.
4
4
THE COURT: Would you raise your right hand,
5 please? Do you swear that the testimony you are about to
5 court.)
6 give in this case will be the truth, the whole truth and
6
7 nothing but the truth, so help you god?
7 affirm and not swear, and I usually ask them in advance do
8
8 you wish to affirm or do you wish to swear, it doesn't
THE WITNESS: To the best of my ability, Your
THE COURT: Sometimes individuals wants to
9 Honor, yes, sir.
9 matter.
10
10
THE WITNESS: I can swear.
11 so let's talk with counsel and see if that's okay.
11
THE COURT: Okay. Well, then, raise your hand
12
12 and I'll swear you again so we're all clear. Do you swear
THE COURT: I have never had somebody say that,
13 bench.)
13 that the testimony you are about to give in this case will
14
14 be the truth, the whole truth and nothing but the truth,
MR. BECRAFT: I will simply tell her to say yes
15 or no, Judge.
15 so help you God?
16
16
17 affirm, I don't think --
17
18
18
MR. MURPHY: I think she has got to swear or
THE COURT: I think it's I do or I so swear or
19 I affirm or I do.
19
20
20
MR. BECRAFT: I will tell her to affirm, Judge,
21 I think that may be the problem.
21
22
22
THE COURT: Well, I'll ask her again and we
23 will see what the answer is. I had somebody one time
23
24 who -- what did that lady say? It wasn't in your case, I
24
25 had a lady who said I swam. She didn't say I swear, it
25
DIRECT - VERNICE KUGLIN
420
419
VERNICE KUGLIN,
Q.
Okay. Let me stop you right there. Who are your
2 parents?
3 Defendant, and having been first duly sworn, was
3 A.
My parents were Teckla and Carl Kuglin.
4 Q.
Were they American citizens?
5
5 A.
Yes, they were. My father was born and raised in
DIRECT EXAMINATION
6 BY MR. BECRAFT:
6 Kansas. He was a first generation American, and my mother was
7 Q.
Will you state your name, please?
7 born and raised in Milwaukee, Wisconsin. She was also first
8 A.
Yes, and I will state it correctly. My name is Vernice
8 generation.
9 Braendli Kuglin.
9 Q.
10 Q.
10 employed at the time you were born?
Okay. I'm sure the court reporter would like it
All right. And what was your -- how was your father
11 spelled.
11 A.
12 A.
12 Mission, and after I was born, he registered my birth with the
It is spelled V, as in Victor, E-R-N-I-C-E. Middle
He was a missionary. He worked for the Sudan United
13 name is B, as in boy, R-A-E-N-D-L-I. My last name is Kuglin,
13 United States Consul in Nigeria.
14 K-U-G-L-I-N.
14 Q.
15 Q.
15 teens, about what you did, where you lived, where you went to
You heard your name pronounced a multitude of different
Bring us quickly, if you can, up until about your mid
16 ways in the courtroom. Your last name is Kuglin, correct?
16 school.
17 A.
That's correct.
17 A.
18 Q.
You're the defendant?
18 When I was born, as I said, we were in Nigeria, I was born in
19 A.
Yes.
19 a mission hospital, and I grew up out in what we call the
20 Q.
Have been throughout this whole trial?
20 bush. It was -- we had a thatch roof house, mud block, no
21 A.
Yes.
21 running water, no electricity, the kitchen was about fifty
22 Q.
Could you tell the jury a little bit about yourself,
22 yards from the house, it had a tin roof, and the outhouse was
Well, at the age of six -- let me back up a little bit.
23 about where you were born, where you grew up, a little bit
23 about a hundred yards from the house. So I grew up in a
24 about your schooling?
24 pretty primitive environment or conditions, but it was a life
25 A.
25 that I learned to love. At age five, I was given
I was born in Nigeria, West Africa.
422
421
anti-malarial drug, with Aspirin, I was paralyzed, and my
A.
I had always dreamed of being a flight attendant, and
2 parents brought me home to the states where I went to Mayo
2 so I went down to Dallas, and I interviewed with Braniff. At
3 Clinic for some treatment. Went back out to Africa, and was
3 that time, Braniff was in its heyday. They had come out with
4 then -- at age six, I went off to boarding school. Now, all
4 the new Braniff strip, and it was, you know, it was the
5 of the missionary children in Nigeria lived in boarding
5 airlines to fly for. I did not get hired by Braniff, and so I
6 school, and this was 400 miles from where my parents lived,
6 ended up working at Texas Instruments on the assembly line at
7 and we lived there nine months out of the year. When I came
7 nighttime, and then later I did door-to-door encyclopedia
8 back to the states again in my fifth grade, went to school in
8 sales work, a job that I'm glad I'm not doing now. Later on
9 Kansas, and then again when I was a freshman in high school.
9 in that year, I decided to go back to Braniff to interview
10 Q.
All right. And when was it you entered high school?
10 again, and I was hired as a flight attendant, and I stayed
11 A.
I entered high school in 1961, this was in Kansas.
11 with Braniff from 1966 through '69. In March of '67, I
12 Q.
Did you complete high school?
12 transferred out to Travis Air Force Base, and I flew the
13 A.
Yes and no. I did three years of high school, and I
13 military contract flights flying troops into Vietnam.
14 had all -- I had taken all the credits that were available,
14 Q.
15 and so I went on to college out of my junior year of high
15 and get married to them?
16 school because college only required -- it required fewer
16 A.
Yes, I did.
17 credits than it was necessary to graduate. So I went on to
17 Q.
Was that a long marriage?
18 college through -- from my junior year.
18 A.
No, that was a rather short marriage.
19 Q.
19 Q.
Okay. As a result, did you have a son born to you?
20 were in school, '65, '66 through whatever?
20 A.
Yes, I did. My son Christopher was born, and when he
21 A.
21 was two months old, his father and I separated.
Give us an approximate range of the years in which you
It was about '6 -- let's see, '63 through about '66,
About this time frame, '68, '69, did you meet somebody
22 and in 1966, I dropped out of college.
22 Q.
Okay. And when was that?
23 Q.
Okay. And did you seek employment after that?
23 A.
That was in 1969.
24 A.
Yes, I did.
24 Q.
All right. What employment have you had since you --
25 Q.
What was that?
25 since 1969 and had your son?
424
423
A.
Oh, let's see, I have done many things. I have worked
and bring along a certain amount of money that he would
2 for the Welfare department. I've been a waitress. I've been
2 continue my flying lessons. So I left my son with his father
3 a kitchen help. I have been a secretary. I have been a file
3 and went to Dallas. Unfortunately, Alex could not -- did not
4 clerk. I was a book manager for a library, and I guess that
4 have time to give me the flying lessons, but I ended up taking
5 covers that range.
5 flight training at Beecham Field there in Fort Worth where I
6 Q.
6 got my commercial, my instrument and my multi-engine rating.
Okay. And how long was that that you were doing those
7 types of jobs?
7 Q.
Did there come a time --
8 A.
Well, that was until about '78.
8
9 Q.
And where were you living at that time?
9
THE COURT: You may.
10 A.
I was living in Baleo, California, Fairfield,
10
11 California.
11 bench.)
12 Q.
12
Did you get a job in 1978 that had something to do with
MR. MURPHY: Judge, I know that counsel wants
13 airplanes?
13 to get as much personal to give the jury some personal
14 A.
14 context, but this is just irrelevant.
Actually, what I did, in 1975, Emily Wurner had been
15 hired by Western. She was the first woman to be allowed to
15
MR. BECRAFT: I'll speed it up, Judge.
16 fly for the commercial carriers, and I was looking for a
16
THE COURT: Okay.
17 career so that I would be able to support my son, put him
17
MR. BECRAFT: Okay.
18 through college and such, and a friend of mine suggested that
18
19 I might take pilot training.
19 court.)
20 Q.
And did you?
20 Q.
21 A.
Yes, I did. So I went down to the local Nappa County
21 about -- where are you employed now?
Ms. Kuglin, listen to my question, can you tell us
22 Airport, and I started taking my flying lessons. I got my
22 A.
I'm currently on a personal leave of absence from
23 private license there, and the same friend had gotten then
23 Federal Express.
24 hired by American Airlines and had moved to Dallas. So he
24 Q.
Okay. And how long have you been working for FedEx?
25 told me that if I would come down to Dallas that he would --
25 A.
I have been working for FedEx since 1985.
426
425
Q.
All right. Where were you working before that?
2 A.
I was working for Royal Airlines in Shreveport,
Q.
And then you moved from, I guess, '80 or '81 to '85,
2 you were flying as a pilot for Royal?
3 Louisiana.
3 A.
Royal, right.
4 Q.
And what were you doing for Royal Airlines?
4 Q.
And then FedEx?
5 A.
I was flying their airplanes. I was first a co-pilot
5 A.
And then FedEx. And my son -- I had mentioned earlier
6 and then a captain on the Beech 99 and then on the Bondarondi
6 that I had left my son with his father, but that was only for
7 (spelled phonetically).
7 a year. So during this time that I was building time, my son
8 Q.
So you moved from Royal to FedEx?
8 was with me, and we moved around quite a bit.
9 A.
Yes, I did.
9 Q.
When was it that you moved to Memphis?
10 Q.
So when did you start to work for Royal?
10 A.
I moved to Memphis in June -- excuse me, June of '85.
11 A.
I started to work for Royal, that was after my
11 Q.
And you have lived here ever since?
12 employment as a corporate pilot in Lafayette, Louisiana, so
12 A.
Yes, I have.
13 that was in 1980 -- '80, '81.
13 Q.
And for the last -- since 1989, have you lived in a
14 Q.
So you were -- before Royal, you were flying also?
14 very specific spot in Memphis?
15 A.
Oh, yes. I flew corporate in Lafayette, Louisiana for
15 A.
Yes.
16 an oil company for six months, and prior to that I had been
16 Q.
What's the address?
17 instructing for two years. After I received all my ratings, I
17 A.
I have lived at 200 Wagner Place, number 802, Memphis
18 instructed for two years. I flew sky divers on the weekend to
18 Tennessee. It's right on the corner of Beale Street and
19 build time, and those were my aviation jobs. Trying to build
19 Wagner place.
20 my time so that I could get hired by FedEx.
20 Q.
21 Q.
So the late '70s, you were training?
21 case?
22 A.
Yes.
22 A.
Yes, I have.
23 Q.
Flying sky divers, then you went to work for a company
23 Q.
You heard the -- you understand the indictment, right?
24 as a corporate pilot?
24 A.
Yes, I do.
25 A.
25 Q.
It charges you with six counts of tax evasion?
Yes.
Ms. Kuglin, did -- have you read the indictment in this
428
427
A.
all the way up into the '80's.
Yes.
2 A.
Oh, yes, I did.
3 she gave testimony in this case, and you sat right over there
3 Q.
Okay. Did you file returns in '91, '92?
4 and listened to it, correct?
4 A.
I did.
5 A.
Yes.
5 Q.
Why were you filing those returns during those years
6 Q.
She said you didn't file returns from --
6 that I have just named off?
2 Q.
You heard Ms. Osborne come from the service center, and
7 A.
Because I thought that I was required to.
8 on other witness' testimony is proper, and I'm going to
8 Q.
And was that based on any study of the law?
9 object.
9 A.
Oh, no, not at all.
10 Q.
Did you ever prepare for these years, '65 through about
7
10
MR. MURPHY: Judge, I don't believe commenting
11 Q.
Ms. Kuglin?
11 '91, '92, did you prepare your own returns?
12 A.
Yes.
12 A.
Some of them, I did.
13 Q.
Let me back up, and I'll ask you this: When was it
13 Q.
All right. Did there come a time in which you had
14 that you started filing returns?
14 others prepare your returns?
15 A.
15 A.
First job I had ever had was A&W Root Beer in Holton,
Yes, H & R Block did some of my returns. I had an
16 Kansas, and that would have been 1960, '61 when we first came
16 accountant here in Memphis do some of my returns.
17 back from Africa.
17 Q.
18 Q.
18 have looked at the '92 return that the government has offered
Do you have a recollection as to when it was you filed
If we had -- I don't know the exhibit number, but you
19 your first tax return?
19 into evidence, correct?
20 A.
20 A.
That's correct.
21 may have been with -- on my parents, so I don't know exactly
21 Q.
There's an accountant listed on there as a return
22 when the first return was filed.
22 preparer, right?
23 Q.
If somebody said '65, would you disagree with them?
23 A.
Yes.
24 A.
Oh, no, not at all.
24 Q.
And that's Mr. Knapp?
25 Q.
And did you file returns in the late '60s, early 70's
25 A.
That's correct.
I would presume that it was probably -- although that
430
429
Q.
He prepared your '92 return?
Q.
What happened then?
2 A.
Yes.
2 A.
3 Q.
Did he prepare some of your returns before that time?
3 airlines or sales people, people who are gone, that when you
4 A.
I believe he did, yes.
4 get home, there's a lot of mail, a lot of housework, a lot of
5 Q.
For a number of years, whatever amount. Okay.
5 everything to do, and so I was cleaning house and turned on
6
Have you ever attended any courses on tax all the way
I was between flights, and as anybody who works for the
6 C-Span, as you heard Mr. Becraft say earlier.
7 up through about '91 or '92?
7 Q.
Can I stop you right there?
8 A.
Not at all.
8 A.
Yes.
9 Q.
Had you ever looked at the Internal Revenue Code?
9 Q.
You said -- I brought up something with the jury, can
10 A.
I didn't even know what it looked like.
10 you kind of describe what you do, your daily routine when
11 Q.
Okay. Let me go straight to the matter, for the years,
11 you're flying for FedEx?
12 '93, '94, '95, '96 through 2001, Ms. Kuglin, did you or did
12 A.
Oh, yes, I can.
13 you not file federal income tax returns?
13 Q.
All right.
14 A.
No, I did not.
14 A.
The routine is different. We as pilots bid every month
15 Q.
Why?
15 for the routings that we want to fly, and based on seniority
16 A.
For the last ten years, I have been asking the IRS
16 and what we can hold in the seniority level, then we have a
17 either through my own letters, through visits to the IRS and
17 different schedule every month. Some of the schedules entail
18 finally through an attorney what section of the Internal
18 getting up in the middle of the night, flying to the
19 Revenue Code makes me liable for the individual income tax and
19 destination, sleeping in the hotels all day, coming back into
20 what law requires me to file the Form 1040. And to this day,
20 Memphis at midnight that night and going back out again.
21 I have not had my questions answered, and so I decided then.
21 That's what we call the infamous hub terms. Those are the
22 Q.
22 flights going in and out every night. Other flights leave
When was it that you started changing your beliefs
23 regarding the filing of income tax returns?
23 Memphis around 2:30 in the morning, go to a destination, sit
24 A.
24 for a few hours and then back into Memphis. Other flights are
Well, the journey that got me to this point to where we
25 are today actually started in 1992.
25 international flights which are 15-day flights where we're
431
432
gone a long period of time, and I did those flights when I was
discussing also taxes. And I found it so interesting and so
2 a co-pilot and flight engineer predominantly. So every month,
2 novel that I had never heard any of this stuff before that I
3 the schedule is different, but we're away from home probably
3 called the 800 number and asked them to send me some
4 anywhere from 200 to 400 hours a month.
4 information and anybody who might -- I might contact in the
5 Q.
And basically while we're sleeping, you're working?
5 local area. So I got the information. Excuse me. And they
6 A.
Basically.
6 referred me, excuse me, to a gentleman by the name of Don
7 Q.
Now, sometime in 1992, I interrupted you a minute ago,
7 Winfield. Don Winfield at that time was the chairman of the
8 you were saying something about you were doing something at
8 Tennessee State Libertarian party, and he was conducting
9 home when something came to your attention about something,
9 meetings here in Memphis. So I went to the meeting. It was a
10 taxes?
10 small group, and I asked them basically what a Libertarian was
11 A.
11 or what the word meant, what the philosophy was, and I learned
Yes, I was cleaning house, and I listen to the TV so I
12 can get things done, and I would on C-Span, and on C-Span that
12 at that time that there were really two words, there were the
13 day, they were covering the Libertarian National Convention,
13 big L -- there was the big L for Libertarian, which was the
14 it was in July of '92. And I had never heard of the word
14 political move, and then there was the little l Libertarian,
15 Libertarian before. I had no idea what it meant. I had no
15 which was the philosophy of the Libertarian movement, and I
16 idea there was a political party called the Libertarian Party.
16 found out from that that the Libertarian philosophy was
17 So it caught my interest, and there two gentlemen, Andre Maru
17 basically the same philosophy of the founding fathers, the
18 (spelled phonetically) Dick Body (spelled phonetically) who
18 philosophy that generated the Bill of Rights, the Constitution
19 were vying for the nomination for the presidential candidate,
19 and the Declaration of Independence, and this philosophy was
20 and as I listened to the debates between these two gentlemen,
20 that in a civil society the initiation of force and the
21 I started hearing things that I had never heard the other two
21 initiation of fraud are not acceptable activities, that we as
22 parties talk about. I had been member of both the Republican
22 citizens are absolutely responsible for our actions and we are
23 and the Democrat parties at different times, but these
23 required to also hold those in power responsible for their
24 gentlemen were discussing the Constitution, they were
24 actions. I also learned that the role of government in a
25 discussing the role of government in society and they were
25 society is to protect the rights of life, liberty and the
434
433
MR. BECRAFT: I'm listening to this TV back
pursuit of happiness for people.
2 Q.
Now, this -- so you became interested in the
2 here, I was wondering if the court could inquire as to
3 Libertarian party as a result of hearing this on the TV and
3 whether the jury can hear Ms. Kuglin?
4 meeting Mr. Winfield?
4
THE WITNESS: Can you hear me all right?
5 A.
Yes.
5
THE COURT: They can hear fine. She is
6 Q.
Can you just briefly tell the jury what was your
6 speaking into her mic, I think everybody can hear well.
7 association with the Libertarian party from that point until
7 You can turn off the screen, if you want to.
8 about '95 or '96, just what you did?
8
9 A.
9 Judge.
Okay. Let's see. I was elected chairman. The state
MR. BECRAFT: I may not know how to do it,
10 Libertarian party, the first meeting that I went to, they were
10
THE COURT: It has got an on/off button. I
11 looking for somebody and I was interested and I thought it
11 think the juror can handle that. Thank you.
12 would be good learning the information about the Libertarian
12 Q.
13 party. I was also directed to an organization called the
13 various meetings where you went --
14 advocates for self-government, and the advocates are located
14 A.
Well, initially --
15 in Atlanta. They are really the educational arm of the
15 Q.
-- regarding the Libertarian party.
16 Libertarian party, and from them I ordered a lot of
16 A.
I'm sorry.
17 information, lots and lots of books. I have a room in my
17 Q.
You told us you went to a lot of Libertarian meetings,
18 house that the entire wall is a book shelf of videos, books,
18 did you learn or begin to learn anything about federal income
19 tapes, flyers and such that I ordered from the advocates and
19 taxes while you were going to these various meetings?
20 from other places. Don and I went to conventions. Don had
20 A.
21 seminars. I organized a group in Memphis called the Advocates
21 made me take notice was that I kept hearing the fact that the
22 for Self-Government supper club and once a month, people who
22 income tax was a voluntary tax. Now, I had been paying my
23 were interested would get together and we would discuss the
23 taxes, I had been filling out my 1040 forms, and Mr. Becraft
24 social political ideas of the Libertarian party and of the
24 asked me earlier why I had been doing it at that time, and I
25 United States.
25 said because I thought I had to. Another factor was that I
Did you learn anything about taxes by attending these
I think the first thing that I heard which struck me or
436
435
was afraid if I didn't that something bad would happen to me.
code, for understanding what it says, for determining whether
2 So when I started hearing that it was a voluntary system, it
2 or not there's a tax that applies to us. If it is, if we
3 just took me surprise. I couldn't understand how it could be
3 determine that we are liable for one of the taxes in that
4 a voluntary system. And they said it was a voluntary
4 code, then it is our civic duty to fill out the documents
5 compliance.
5 which relate to that tax.
6
6
Now, the words voluntary and compliance to me don't
Now, once we filled out the documents and
7 match very well. Voluntary, I looked up in the dictionary,
7 self-assessed, it's now our responsibility to comply with our
8 and it -- basically, it was something that wasn't mandatory,
8 assessment. And I learned that as American citizens, we are
9 it was something that you chose to do, that you -- compliance
9 responsible for self-assessing. And once we self-assess, then
10 was completely different. It was something that you had to
10 we must comply. But first of all, we have to determine
11 do. So I was confused by this term, and I -- somebody at one
11 whether or not we're liable for one of the taxes. So that
12 of the seminars suggested that I call the IRS and ask them if
12 straightened out the different -- the conflict in those words
13 the income tax was a voluntary tax. So I did. I called up
13 for me.
14 the IRS, and I said, you know, I would like to know if the
14 Q.
15 income tax is voluntary because if it is, I want to
15 into when you got involved in this -- on your personal
16 unvolunteer right now. And they said, no, it's voluntary
16 endeavor to learn something about the tax laws, you heard
17 compliance, and I said what does voluntary compliance mean,
17 these statements about voluntary?
18 and they said you have to do it. And I said that doesn't
18 A.
Yes, I did.
19 sound very voluntary to me. Well, the conversation didn't get
19 Q.
Now, down to your left --
20 very far. So I decided I needed to look somewhere else, and I
20 A.
Yes.
21 kept asking around, reading, trying to find some understanding
21 Q.
-- on the floor, there is that blue box, can I request
22 of this conflict of terms. And I finally met a gentleman, I
22 that you pull out the files that bear the numbers 5 through 15
23 don't remember his name anymore, heard him at a seminar that I
23 and then also 22? Do you have them?
24 heard him speak at, and he said his understanding was that as
24 A.
Yes.
25 American citizens, we are responsible for reading the tax
25 Q.
Okay. Now, can I direct your attention to the one that
Okay. But -- one of the first things you kind of ran
438
437
is -- has the number on it of five?
Division of the IRS. And as the committee was asking some
2 A.
Yes.
2 questions, they raised a question in reference to where there
3 Q.
Okay. Can you identify that for me, please?
3 would be some offices or counsel that would be -- that they
4 A.
Yes. This is entitled Internal Revenue investigation.
4 would contact, and Mr. Curtis who was one of the Congressmen
5 It's dated Thursday, February the 3rd, 1953, House of
5 asked the question -- made the comment an alcohol tax matter
6 Representatives Subcommittee on Administration of the Internal
6 that would go to the appeals section, and he was interrupted
7 Revenue laws of the Committee on Ways and Means, Washington,
7 by Mr. Avis, and Mr. Avis said there is no such thing, that is
8 D. C.
8 where the structure differs, and he went on to say, let me
9 Q.
Is that something that you read and relied upon that
9 point this out now, your income tax is one hundred percent
10 related to your understanding of tax laws?
10 voluntary tax. Your liquor tax is a one hundred percent
11 A.
Oh, yes, it is.
11 enforced tax. Now, the situation is as different as night and
12 Q.
Do you have a judgment or recollection as to when it
12 day. Consequently, your same rules just will not apply.
13 was that you might have seen or read this document?
13 Q.
14 A.
14 you just read us from, what does it come from?
This would have been early on prior to the time that I
Now, what's your understanding that that passage that
15 stopped filing, somewhere between '92 and '95.
15 A.
Well, this comes from the government. This comes from
16 Q.
Okay. But no later than April the 15th of 1996?
16 a congressional hearing, that comes from a man who is at the
17 A.
Oh, no, not at all.
17 head of an agency, and he's telling me here that the income
18 Q.
And what was it in this particular document that was
18 tax is one hundred percent voluntary tax.
19 important for you?
19 Q.
20 A.
20 reading from a government document?
Well, the -- I can probably quote it better than I can
Okay. And it was your understanding that you were
21 find it. What was happening at this time is there was an
21 A.
Yes, sir.
22 investigation of the Internal Revenue Service for corruption
22 Q.
Okay. Let's kind of flip that over and set it aside
23 within the service, and at this investigation was Mr. Avis who
23 for right now.
24 at that time was the -- let's see, Mr. Avis, he, I believe,
24 A.
Okay.
25 was the head of the -- of the Alcohol, Tobacco and Firearms
25 Q.
And let me direct your attention to the one -- the
440
439
document that has a number six on it.
see. The great abuse we're finding in this area, if allowed
2 A.
All right, I have it.
2 to continue unchecked, could result in serious decline in
3 Q.
And can you identify that for us, please?
3 taxpayers' perception of the fairness and evenhandedness of
4 A.
Yes, this is -- it says '79 annual report from the
4 our administration of the tax system and consequently in their
5 Commissioner of the Internal Revenue.
5 voluntary compliance. So here we have six places where the
6 Q.
6 Commissioner of the Internal Revenue Service talked about the
And what was important about that particular document
7 in reference to your beliefs?
7 income tax or the tax system being a voluntary system.
8 A.
8 Q.
Well, I find that throughout this document, there was
Take a look at the file that has the number on it
9 some six times where the word voluntary was mentioned, and it
9 seven -- seven and eight.
10 says -- let me read the several places. Let's see, the whole
10 A.
You want me to set this aside?
11 sentence, there is no doubt that better taxpayer assistance,
11 Q.
Yes.
12 more sensitive responsiveness to taxpayer compliance,
12 A.
Put it back in the file. Which number was that?
13 complaints and problems and simpler tax forms and instructions
13 Q.
Seven.
14 are of great importance in achieving a high level of voluntary
14 A.
Seven.
15 compliance with our tax laws. Later on, it says, to put these
15 Q.
And can you identify the document for us, please?
16 figures in context in the same tax years individuals
16 A.
Yes, this is a 1992 1040 form.
17 voluntarily reported nearly 1.1 trillion in income and paid a
17 Q.
Copies of parts of the '92 instruction booklet?
18 total of 142 billion dollars in taxes.
18 A.
Yes, it is.
19
The next paragraph, the report lends considerable
19 Q.
Is that something you read and relied upon?
20 weight to the conclusions drawn from past studies that
20 A.
Yes, it is.
21 voluntary reporting is highest when incomes are subject to tax
21 Q.
Direct our attention to that particular document, the
22 withholding. And the next paragraph, in fairness to the
22 '92 instruction booklet bearing the number seven on it, what
23 millions of taxpayers who voluntarily file, report their
23 was it?
24 income and pay the tax, we must strengthen current compliance
24 A.
What was the document?
25 efforts. And I believe there's one more, it says the -- let's
25 Q.
What was on that document that you found?
442
441
A.
It says right here -- excuse me, I'm sorry, it says a
boyfriend looking for ever since. We walked down to
2 note from the commissioner. Dear Taxpayer. Thank you for
2 Gordon Biersch's last night. My suspicions is it got left
3 making this nation's tax system the most effective system of
3 down there, but it was all her notes in it, but we have --
4 voluntary compliance in the world.
4 for our exhibits, we have got so much redundancy built
5 Q.
5 into it that she has misplaced her notebook, but, you
Let me direct your attention to another one, the next
6 one, number eight. Is that something similar except for '93?
6 know -- so we're just going through the ones that she has
7 A.
7 got.
Let me get this here. I did have a binder with all of
8 these, and somehow it disappeared last night when I left it
8
THE COURT: The problem with the inference is
9 here at the court, so I'm not sure where it is. '93, yes.
9 that somehow she left it here, and Mr. Murphy is here and
10
THE COURT: Let me talk to people at side.
10 it disappeared, that's the problem with the inference is
11
11 that she's blaming it on the government. Frankly, I'm not
12 bench.)
12 the government, I'm the judiciary. I know we didn't do
13
13 anything with it.
THE COURT: Okay. That was a very
14 inappropriate aside. What is she talking about? You
14
MR. BECRAFT: I will ask a question about it.
15 didn't come to me this morning and say something is
15
THE COURT: Mr. Murphy, we don't have to say
16 missing. What is missing?
16 anything about it, but I want to make sure that there is a
17
17 not a problem. If she thinks she is missing something, we
MR. BECRAFT: No, Your Honor. I left all of
18 our books up here last night.
18 need to look for it.
19
THE COURT: Where did you leave them?
19
20
MR. BECRAFT: Just right there.
20 located it, but we have got so much spare copies that
21
THE COURT: Is something missing?
21 we're proceeding with the box that we have got. It
22
MR. BECRAFT: Well, no, no -- we don't know
22 poses --
MR. BECRAFT: We have, Your Honor. We haven't
23 where it went. After we left court, I left all these
23
THE COURT: That's no problem. That's fine.
24 exhibits up here so I wouldn't have to bring them back and
24
25 forth. She has a white notebook that she has had her
25 court.)
444
443
THE COURT: That's the first I had heard about
Q.
You had the same exhibits organized for yourself in
2 anybody leaving something in court and it not being here
2 your own little folder?
3 the next morning. I wish they had told me this morning.
3 A.
Yes, I did.
4 We try to lock things up every night, and, frankly, we do.
4 Q.
Which right now cannot be located?
5 We lock up the courtroom. In fact, we even lock up the
5 A.
That's correct.
6 jury room, have to unlock it in the morning, but I wanted
6
7 to make sure there wasn't something that we had
7 you.
8 inadvertently moved around, and we will look for it,
8
9 although I don't think --
9 around, I won't need it.
10
THE WITNESS: May I address the court?
10
THE COURT: That's no problem at all.
11
THE COURT: That's okay, I just wanted to make
11
MR. BECRAFT: My personal conclusion is it's
THE COURT: If we find it, we will give it to
THE WITNESS: If you don't mind me fumbling
12 sure we didn't lose something.
12 somewhere on Main Street.
13
13
THE WITNESS: No, I just meant it was just I
THE WITNESS: Yes.
14 had them all in file, and so I was just fumbling around a
14 Q.
15 little bit. I didn't mean to imply that there was
15 number, what is labeled number 8?
16 anything that -- you know, it's possible that I had taken
16 A.
It's number 8.
17 it with me and left it somewhere.
17 Q.
Kind of hit it fast. Is that another statement like
18
18 the one you just read?
THE COURT: Sure, that's okay. I just wanted
We have been distracted, let's go back to that exhibit
19 to make sure that we didn't lose anybody, okay.
19 A.
Right, it is 1993, 1040, it says you are among the
20
THE WITNESS: No, no.
20 millions of Americans who comply with the tax law voluntarily.
21
THE COURT: It is possible for the federal
21 Q.
Okay. Let me direct your attention to the one that has
22 government to lose something, I agree with you on that.
22 the number nine on it.
23
23 A.
All right.
24 not as easy for me to get to as my own copy.
24 Q.
Or skip that one and go to number ten.
25
25 A.
All right. I have number ten.
THE WITNESS: I have everything here, it's just
THE COURT: No problem.
446
445
Q.
Was that something you read and relied upon?
14 and 15, can you pull those out for us, please?
2 A.
Yes, it is.
2 A.
I also had my documents highlighted, so it is going to
3 Q.
What was important about it?
3 take me a little while to find.
4 A.
Well, the title is Withholding Is Not Required.
4 Q.
Now, you just got through talking about Exhibit Number
5 Employers and employees are volunteers in a tax scheme. It
5 10, the mission statement of the IRS, right?
6 says employers are not required to have money withheld from
6 A.
Yes.
7 their earnings.
7 Q.
All right. Do 13, 14 and 15, those documents bearing
8 Q.
Okay.
8 those numbers, do they kind of relate to this general topic of
9 A.
Employees, I'm sorry.
9 the mission of the IRS?
10 Q.
Okay. Now, listen to my number, I directed your
10 A.
Yes, they do.
11 attention to number ten.
11 Q.
Okay. And is it similar to -- is that mission of the
12 A.
12 IRS in those documents similar to the one in number 10?
I'm sorry, you are absolutely correct, I pulled out the
13 wrong one. Number ten.
13 A.
Let me find this here right here. Yes, it is. The tax
14 Q.
What is your understanding of what that document is?
14 system is based on voluntary compliance and taxpayers complete
15 A.
This document is -- at the top, it has the Internal
15 and return the forms with payment of any tax owed.
16 Revenue Service logo, and then it says mission. The purpose
16 Q.
Is there something on that -- is that number 13?
17 of the IRS is to collect the proper amount of tax revenues at
17 A.
This is number 13.
18 the least cost to the public and in a manner that warrants the
18 Q.
Is there something at the top of the page that would
19 highest degree of public confidence. In our integrity,
19 indicate a date?
20 efficiency and fairness, to achieve that purpose, we will
20 A.
Yes, it says 4-1 of '97.
21 encourage and achieve the highest possible degree of voluntary
21 Q.
All right. And is it fair to say that the next two
22 compliance in accordance with tax laws and regulations. We
22 exhibits are basically the same type of document, but for
23 will advise the public of their rights and responsibilities.
23 later years?
24 Q.
24 A.
Now, let me direct your attention to -- there's a
25 series of similar documents that are labeled or numbered 13,
Yes, they are, and they are for 4-1-98. Documents come
25 out of 26 Code of Federal Regulations, Chapter 1. And the
448
447
third one is for April 1st of '99.
1960.
2 Q.
2 Q.
Okay. Of course, these are later in time, but sometime
Okay. I have to ask you some questions that relate to
3 shortly after these documents would have been published and
3 a promise that I made to the court. Ms. Kuglin, is it your
4 before April 15 of, say, 2000 or 2001, had you read those
4 understanding that during your testimony of this case that
5 documents?
5 what you're going to be telling the jury is your beliefs about
6 A.
Yes, I had.
6 the law, correct?
7 Q.
Did you rely upon them?
7 A.
That's correct.
8 A.
Yes, I did.
8 Q.
All right. So if we kind of get rolling along here and
9 Q.
For the belief that there's statements from the
9 you say the law, the law, the law, are you telling us your
10 government about voluntary compliance?
10 belief about the law?
11 A.
Absolutely.
11 A.
Yes, it is my belief. Just my belief of the law.
12 Q.
Now, these documents right here, 13, 14 and 15, what is
12 Q.
And you understand that later on, the court is going to
13 your understanding as to their real nature, what are those
13 be telling the jury what the law is?
14 documents?
14 A.
That's correct.
15 A.
15 Q.
So you're not attempting to tell the jury what the law
These are 601, 602 is tax form and instructions, it's
16 about completing the forms.
16 is?
17 Q.
All right. Is that regulations?
17 A.
No, I'm not.
18 A.
Yes, it is.
18 Q.
Having said about, let's roll back to that document
19 Q.
Let me direct your attention to -- can you pull out 22?
19 number 22, did you say it is called the Flora Supreme Court
20 Can you identify the exhibit number or the document that is
20 case?
21 labeled 22 for us, please?
21 A.
Yes.
22 A.
22 Q.
Okay. Did you read that at some time when you first
Yes, the document that is labeled 22 is a -- it's from
23 the Supreme Court reporter. It's a case entitled Walter Flora
23 started studying the tax laws?
24 versus the United States of America, and it's dated March --
24 A.
Yes, I did.
25 well, re-argued November 12th, 1959, decided March the 21st of
25 Q.
Okay. Direct your attention to -- what was it that was
450
449
important in that particular case that you noted?
it. And what the speakers always tell you to do is not to
2 A.
2 rely on what they have said, but to go and research the
This is on this document, it was at page six of 47, and
3 there's a statement which the court returned in their
3 documents, go to the library, find the documents, substantiate
4 decision. It says our system of taxation is based upon
4 what they have basically said, and that's why I got the
5 voluntary assessment and payment, not upon distraint.
5 documents and what I started doing.
6 Q.
What did that mean to you?
6 Q.
7 A.
That basically substantiated the things that I had read
7 Libertarian party meetings?
Now, you said you got a lot of your tax information at
8 before about voluntary -- that the tax system was voluntary,
8 A.
Yes, and conventions and other places.
9 that, as I stated before, we as citizens are to understand the
9 Q.
Was the Libertarian party, the speakers there, were
10 tax code, as best we can, assess ourselves, and then
10 they people that -- were the only speakers ones that were
11 voluntarily comply with the rules and regulations if it
11 speaking about taxes?
12 applies to us.
12 A.
13 Q.
13 seminars that were being held. Don Winfield put on seminars
So would you have read this case and relied upon it at
Oh, no, no, there were other -- I went to other
14 some time before, oh, 1996 or 1997?
14 and he had speakers come. I go to a convention every August
15 A.
Oh, yes.
15 called the ARIS Convention in Aspen and sometimes the speakers
16 Q.
Would it have been before that time?
16 there are discussing the tax issues.
17 A.
Yeah. Oh, yes.
17 Q.
18 Q.
Give us your best judgment or recollection as to when
18 than taxes?
But are they talking about something beyond or other
19 you were going to these meetings, when was it that you started
19 A.
20 hearing this stuff about voluntary?
20 how to put it.
21 A.
21 Q.
Do they have speakers about politics?
22 as I said before, I started to dig into it and accumulate
22 A.
Yes.
23 documents. At these conventions and meetings that you go to,
23 Q.
Economics?
24 there is a lot of people who bring copies, forms and things
24 A.
They talk about politics, economics, the role of
25 like that which, you know, talk about the different aspects of
25 government in society, how we can improve our society, what
It was at the meetings, I first started hearing it, and
Oh -- they do, yes, they talk about the -- let me see
452
451
the founding fathers intended for our society, how the tax
to be very informative and very credible.
2 system was developed and just a wide range of subjects.
2 Q.
3 Q.
3 about the United States Constitution, correct?
Well, so by -- between '92 and '93 and all the way up
Now, you listened to these tapes and learned something
4 through '94, were you digging into this topic of how do the
4 A.
Yes, I did.
5 federal income tax laws operate?
5 Q.
Did you read any terms or engage in any study that
6 A.
6 related to the constitutional provisions that relate to
Absolutely. I had -- when I -- some of the material I
7 had gotten from the Advocates for Self-Government, several of
7 taxation?
8 the books, and I believe that they were in regard to the
8 A.
Yes, I did.
9 Constitution. I got a series of cassette tapes on the
9 Q.
Okay. Explain to us what it was that you were reading.
10 Constitution. I was very interested in finding out how the
10 A.
Okay. I ordered a tax code -- I'm sorry, I didn't mean
11 founding fathers looked at the tax issues and how they
11 tax code, I looked over here. It's bigger than this. I
12 determined what type of tax system would -- was going to be in
12 ordered a copy of the Constitution, and I was really surprised
13 the country.
13 when I got it, because the Declaration of Independence, the
14 Q.
Let me stop you right there.
14 Bill of Rights and the Constitution are in a book about this
15 A.
Sure.
15 small, and I thought, boy, I have never seen this, you know,
16 Q.
Just for -- you mentioned tapes and I have shown this
16 why did I not get this book in school. And I started reading
17 before, what do I have in my hand?
17 it, and I ordered the set of tapes so that it would help me
18 A.
18 understand this, because I had read several places in the
You have a series of cassette tapes done by Knowledge
19 Products. They're outside of Nashville, Tennessee or, I'm
19 Constitution that related to taxes --
20 sorry, Chattanooga.
20 Q.
Can I stop you right there?
21 Q.
And narrated by Walter Cronkyte?
21 A.
Yes.
22 A.
Yes. They have different series, one is on economics,
22 Q.
So you had the tape series, the Constitution itself.
23 one is on religions of the world, different wars of the world,
23 Were there any other documents, that in order to understand
24 just -- there's different series of those tapes, and they're
24 the constitutional aspects of federal taxation, any other
25 narrated by different very prominent people. And I find them
25 types of things that you read?
454
453
A.
Yes, I did. After I had read the information they had,
to get out from under the long arm of the British government,
2 there were court cases that I started reading.
2 and after the revolution, there was the Articles of
3 Q.
3 Confederation were compiled, and the Articles of Confederation
Okay. What were -- what were the names of those court
4 cases to your understanding?
4 are similar to the Constitution, much looser than the
5 A.
5 Constitution. And the Articles of Confederation, one of the
The first case was the -- that I was directed to, and
6 you'll have to understand that I took --
6 things it did not allow for was for the national government to
7 Q.
7 be able to levy taxes, and part of this was because the
Now, listen to my question. Just give the names of the
8 questions.
8 citizens of each of the states, the states had the power to
9 A.
9 tax within their own borders and they were, very, very
The first case was the Pollock case. The second case
10 was the Brushaber case. The third case was Flint versus Stone
10 hesitant to allow a central government to have the power of
11 Tracy. The fourth case was Redfield versus Fisher. Fifth
11 competing with them in the taxation arena. So the Articles of
12 case was Sims versus Ahrens, and the final case in regard to
12 Confederation did not allow for that.
13 this was Jack Cole versus McFarland.
13
14 Q.
Okay. So in these materials that you have listed off
14 emergencies that really needed the federal government to
15 for us, the Constitution itself, the audio tape series, those
15 intervene, and at this time, the national government, as it
16 cases, do they relate in some way to your understanding about
16 was called then, had very, very limited powers to protect from
17 at least the constitutional nature of federal income taxes?
17 the enemy without, to adjudicate disagreements, force and
18 A.
Yes, they did.
18 fraud within the society, but without the ability to lay
19 Q.
Give us -- tell us what you learned by listening to the
19 taxes, they could not really fight a war, and so the -- there
However, situations arose where there was some national
20 audio tapes, reading the cases, looking at the Constitution,
20 was a convention convened in Philadelphia in order to revise
21 reading anything else that you did.
21 the Articles of Confederation to allow the national government
22 A.
22 to be able to require the states to pay a portion of the
Well, I found out that the founding fathers were very,
23 very interested in the tax issue. The revolution had
23 monies necessary for a war or something like that. What ended
24 basically -- the straw that broke the camel's back was a three
24 up out of that was the Constitution. They actually wrote an
25 cent tax on tea, and the whole revolution basically was trying
25 entirely new document. In those cassette tapes, there's some
456
455
THE COURT: Is that okay?
very, very interesting information on the debates that went on
2 about the tax issue. This was -- this was something very,
2
THE WITNESS: That would be fine. Thank you.
3 very serious for the founding fathers, and how they would
3
THE COURT: We're going to take a short break,
4 decide who got taxed, who got to do the taxing and such like
4 and that way I can get something taken care of in the back
5 that. I found out that generally the strong arm of taxation
5 that I need to actually sign, and I will be right back.
6 for -- in the past, kings, governments and such like that had
6 Five minutes. That will also give you a short break.
7 been customs taxes, indirect taxes, and that -- excuse me, I
7 We're going to stay really much past 5:00. We're going to
8 need to take a drink.
8 go right to 5:00, and we're going to stop at 5:00. We're
9 Q.
You want me to rephrase?
9 going to come back at 9:00 tomorrow, just like we did
10 A.
Yes.
10 today. 8:30, come back at 9:00 tomorrow, so that will be
11 Q.
Okay. What was it that you learned by studying these
11 our schedule. See you in five minutes.
12 documents? You were telling us about your studies of the
12
13 Constitution, relationship to federal taxation, what was it
13
THE COURT: You all set?
14 that you learned by engaging this study that had an effect
14
THE WITNESS: Yes, thank you.
15 upon your beliefs?
15
THE COURT: Sure. I'm sorry we -- I tried to
16 A.
16 check on having -- see if the cleaning folks could have
Right. I found out in studying this that there were
17 two types of -- basically two types of taxes which were
17 possibly gotten that book. I would have had them check
18 created under the Constitution. There were the direct taxes
18 earlier this morning --
19 and indirect taxes. Now, Article 1, Section 8 of the
19
20 Constitution says basically that Congress shall have the power
20 it this way. You know, it will just be a little bit more
21 to -- excuse me, let me get it out. I'm a little nervous
21 effort on my part, but that's fine.
22 here.
22
23
THE COURT: Actually, I need to take about a
THE WITNESS: That's all right. We can handle
MR. BECRAFT: I bet we left it at Gordon
23 Biersch's, that's my bet, Judge.
24 five-minute break.
24
25
25 to try to take care of everybody.
THE WITNESS: That would be great.
THE COURT: I wish -- we might make an effort
458
457
MR. BECRAFT: Judge, it's really no problem,
are three places that has a reference to taxes. Article 1,
2 because she has made so many copies of the exhibits that
2 Section 8 of the Constitution states that the Congress shall
3 we have redundancy built in.
3 have the power to lay and collect taxes, excised, imposed and
4
THE COURT: I think I have done what I should
4 duties, to provide for the common defense and for the general
5 do. I will check on everything I can and I will continue
5 welfare. But all duties imposed and excises must be uniform
6 to do that.
6 throughout the United States. In other words, if you have a
7
7 gas tax in Vermont of 50 cents, you have to have a gas tax in
THE WITNESS: Don't be worried about it because
8 we will be fine. Thank you.
8 California of 50 cents. They have to be uniform throughout
9
9 the country. That Article 1, Section nine of the Constitution
THE COURT: Well, Mrs. Parker, I'm going to let
10 you actually -- we'll be quite and let you go get the
10 addresses a different type of tax. It says no capitation or a
11 jury.
11 direct tax shall be laid unless in proportion to the census
12
12 and the enumeration herein before ordered to be taken.
13
THE COURT: Anyway, we're ready to proceed.
13
Now, in Article 1, section 8, they were discussing what
14 Thank you.
14 is known as indirect taxes. Indirect taxes are those, excised
15
15 imposed taxes which can be passed on to somebody else. In
16 Q.
Ms. Kuglin, I have an idea as to where we were before
16 other words, if you are a business person and you have a
17 the break. You were telling us -- I had posed some question
17 certain business expense or you have a federal -- a tax that
18 about from all this material that you read and studied, you
18 you have to pay, you can pass that on to somebody else.
19 know, you had reached a certain belief about the taxes powers
19 Direct taxes were taxes that couldn't be passed on, they were
20 of the United States under the United States Constitution, I
20 basically taxes that were placed upon the property, fruits of
21 think you were explaining what you had learned or what you
21 labor and such like that. And then later on, you have the
22 believed in that respect when we broke.
22 16th Amendment, which we'll get into, I believe, a little
23 A.
That's correct.
23 later.
24 Q.
All right. I asked the same question all over again.
24 Q.
25 A.
All right. And I said that in the Constitution there
25 this afternoon about some cases that you read. Did they --
Now, did you read something -- you mentioned earlier
459
460
those cases themselves relate to this issue of, you know, the
directly tax the individuals in the states, that the bill was
2 constitutional nature of federal income taxes, and did they
2 sent to the individual states, and it was up to the states to
3 play some role in your beliefs about your requirement to file
3 determine -- to figure out how they were going to pay their
4 returns?
4 share of the bill. Some states, if they had enough money in
5 A.
Oh, absolutely.
5 their coffers to pay their share of the bill, the citizens of
6 Q.
Okay. Can you explain to the jury what this Pollock
6 the states might never ever know that the tax had been paid.
7 case was about?
7 Other states, if they didn't have enough money would -- could
8 A.
8 decide how they wanted to tax their citizens. For instance,
Well, after the -- let me back up just a moment for
9 the -- back to the war between the states and to the direct
9 in the State of Tennessee, they might decide to tax real
10 tax. There was a couple of things I wanted to explain on the
10 estate, might decide to tax the number of windows you have in
11 direct tax. There was some limitations on direct taxation.
11 a house, the number of fireplaces or such like that. But that
12 The federal government could tax excise taxes or indirect
12 was left up to the state. That was not a rule the federal
13 taxes, but they did have a limit on direct taxes. One of the
13 government had, so I just wanted to clarify on the direct
14 limitations on those direct taxes was that they could only be
14 taxes. And as I started reading more and more -- I was going
15 levied in states of declared emergency and that the tax must
15 back to the war between the states, there was a tax, direct
16 end within two years after that state of emergency ended. The
16 tax levied for raising the money for the war between the
17 other requirement was that the cost of the state of -- of the
17 states, and this was done according to constitutional
18 state of emergency needed to be computed, divided among the
18 mandates, and the bill was sent to the states. The tax ended
19 states based on their inhabitance and the bill sent to the
19 not two years after the war, they took a little extra year to
20 states. I think all of us learned in school about no
20 do that, but it did end three years after the war, and from
21 taxation -- no taxation without representation. Well, that's
21 that time on, there really was no income tax, direct tax like
22 where this came from, that the percentage of the bill for the
22 by the federal government until about 1894 that Congress
23 state of emergency that was sent to any individual state was
23 decided that they needed a little bit more money. I don't
24 done so based on the number of inhabitants. Now, one thing I
24 think that's very unusual for us. We hear that all the time,
25 found very interesting was that the Congress could not
25 they want a little bit more money. And so there was an income
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461
tax of 1894 was passed. And you want me to continue?
Q.
2 Q.
Well, my question to you is that you mentioned --
2 number 16.
3 A.
Yes.
3 A.
Okay. I have 16. Mr. Pollock, yes.
4 Q.
-- this Pollock case.
4 Q.
You just stuck something in your hand?
5 A.
Yes.
5 A.
Yes.
6 Q.
I would like to know what you learned by reading that
6 Q.
Is that file folder 16?
7 document.
7 A.
This is file folder 16, yes.
8 A.
8 Q.
Okay. Is that something you read and relied upon?
9 income tax of 1894. Mr. Pollock worked for Farmers Loan and
9 A.
Yes, it is. It is the 339 pages of Farmer -- Pollock
10 Trust Company, and when the income tax was instituted, the
10 versus Farmers Loan and Trust.
11 directors of the company began taking -- paying taxes out of
11 Q.
All right.
12 the profits of his stocks and his bonds. And in 1895, people
12 A.
And I can continue on with what I was saying if you
13 were still very familiar with the Constitution. Most people,
13 would like me to.
14 you know, had read it and were familiar with it. And so he
14 Q.
15 felt that the income tax of 1894 was not a constitutional tax,
15 pages?
16 that it could not be levied on the income off of his stocks
16 A.
Yes, I did.
17 and bonds, so he took the case to court, he and some other
17 Q.
Did you read it all?
18 people, and it ended up all the way up at the Supreme Court
18 A.
Yes.
19 level. And in that Supreme Court decision, the majority of
19 Q.
Have you studied it?
20 the judges or the majority ruling of that case was that the
20 A.
Yes, I have. I have read it several times.
21 income tax was a tax on property and that because it had not
21 Q.
Is it a little harder to understand than a novel?
22 been levied in relationship to uniformity, or I'm sorry, let
22 A.
Yes, it is, but not too much harder. You have to read
23 me back up.
23 it slowly, and if you read it slowly, then it begins to fall
24 Q.
Let me ask you this -- why don't you pull out --
24 into place.
25 A.
Thank you.
25 Q.
Okay. The Pollock case was really as a result of the
There's a file folder in that blue box, there's a
You mentioned that that is an extremely long case, 339
Now, what was the refined essence of what you learned
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463
by reading that document that you have in your hand?
Q.
2 A.
2 folder, 17.
Okay. As I was -- I was tempted to say a little
Okay. Let me direct your attention to that file
3 earlier that the majority of the judges ruled that the tax --
3 A.
Did you want me to lay this aside?
4 income tax of 1894 was a direct tax and because -- on property
4 Q.
Yes, lay 16 aside.
5 and that because it had not been apportioned that it was not
5 A.
All right. Let me just clarify this, you just want the
6 constitutional.
6 stack of exhibits that we're using right here or --
7
7 Q.
Now, they defined the direct tax as a tax on property.
Yeah, that will be fine, or you can turn around and put
8 Interestingly enough, there was a dissenting position in this
8 them up there. We're through with them right now, if you need
9 case, and this dissenting position was written by a new judge
9 space.
10 on the court by the name of Justice White, and in his
10 A.
Okay.
11 dissenting position, Justice White said no, the income tax is
11 Q.
Now, you have pulled out of the blue box file folder
12 not a direct tax, it's an excise tax and, therefore, it must
12 17?
13 be uniform across the country.
13 A.
That's correct.
14 Q.
Now --
14 Q.
Okay. Can you tell us what that is?
15 A.
And so the case ruled the income tax of 1894
15 A.
Yes, this is another court case, Supreme Court printed
16 unconstitutional.
16 out of the Supreme Court Recorder, entitled Frank R. Brushaber
17 Q.
17 versus Union Pacific Railroad Company.
Did you read any studies that related to what happened
18 after the Pollock case?
18 Q.
Now, did you read this case?
19 A.
Yes.
19 A.
Yes, I did.
20 Q.
Was that type of stuff that was covered in this tape
20 Q.
And can you tell the jury what you learned, how this
21 series here?
21 had some impact or view or -- impact upon your beliefs
22 A.
22 regarding federal income taxes?
Yes, in that tape series, and also I had read some
23 books that referred to, and there were other cases. There was
23 A.
I want to back up just briefly, after the Pollock
24 the next case that I'm going to talk about, had referred to
24 decision, Congress was not real happy with this decision. And
25 Pollock and some of the decisions in the Pollock case.
25 other people were not real happy with it, and so they were
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465
garnering inform -- they were garnering support to attempt to
Pollock case was incorrect, that income tax was not a direct
2 do another tax, income tax, and finally, in 1913, they --
2 tax and that it needed not to be apportioned, that, in fact,
3 Congress garnered enough support to pass what we know as the
3 by virtue of its name, the term the income tax was an indirect
4 16th Amendment, and the 16th Amendment, I would like to read
4 tax, and the requirement under Section 1, Article 1, Section 8
5 that, if I might, what it said about -- 16th Amendment said
5 of the Constitution says that indirect taxes must be levied
6 that Congress shall have the power to lay and collect taxes on
6 uniformly across the country. So the -- the -- one other
7 incomes from whatever source derived without apportionment
7 thing that came out of the Brushaber case was that the 16th
8 among the several states. Basically, what the amendment was
8 Amendment -- many people feel that the 16th Amendment was
9 wanting to do is to get rid of the apportionment requirement
9 declared unconstitutional at that time. It was not, and
10 which the Pollock case had assigned to the income tax when it
10 Justice White did not declare it unconstitutional. He simply
11 defined it as a direct tax. So after they passed the 16th
11 defined that the constitutional restrictions of direct taxes
12 Amendment, another situation -- another situation arose
12 by apportionment, indirect taxes by uniformity still applied,
13 similar to Mr. Pollock's situation. And this one was a Mr.
13 that had not been changed, but that the term income taxes was
14 Brushaber,and Mr. Brushaber worked for the Union Pacific
14 an excise tax.
15 Railroad Company, and again, he owned -- I'm sorry, he did not
15 Q.
16 work for the Union Pacific Railroad, he owned stock in the
16 significance is a case that declares the federal income tax to
17 Union Pacific Railroad Company and, again, they began
17 be an excise tax, of what significance is it to you about
18 withholding taxes out of the profits of his stocks. So he
18 filing returns?
19 took this to the court -- excuse me a moment. Again, this
19 A.
20 went all the way up to the Supreme Court. Now, interesting
20 definition of what exactly an excise tax was, I had to do a
21 factors, I told you before on the Pollock case that the
21 little bit more research.
22 dissenting decision was written by a Justice White. By the
22 Q.
23 time the Brushaber came along, Justice White had become the
23 research?
24 chief justice of the Supreme Court, and he decided to write
24 A.
25 this opinion himself. And in the opinion, he said that the
25 was a case entitled Flint versus Stone Tracy.
Well, Ms. Kuglin, this is kind of -- you know, of what
Well, an excise tax -- and in order to find the
Let me stop you there, what was that, what was this
Well, the research that I did -- but the main research
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467
Q.
Did you read that document?
light of the fact that Justice White in the Brushaber case
2 A.
Yes, I did. May I take it --
2 said that the income tax was actually an excise tax, and now
3 Q.
Yes, it is file number 18.
3 in Flint versus Stone Tracy, I'm told that excise taxes are
4 A.
Okay.
4 those laid upon manufacturers, upon licenses and upon
5 Q.
You can lay the other aside behind you.
5 corporations. So I'm beginning to really question what is
6 A.
I need to put this back.
6 going on here, because I know that I'm told that the income
7 Q.
You have file number 18 in front of you?
7 tax is the tax I'm liable for on my wages, and every -- these
8 A.
Yes, I do.
8 documents that I have come across so far tell me a different
9 Q.
Can you identify that for us, please?
9 story.
10 A.
Yes. This case is entitled Flint versus Stone Tracy,
10 Q.
Let me get you to -- pull out all at once files number
11 and it was decided in -- let's see the date on this is -- this
11 19, 20 and 21.
12 is in about 1925, I believe, it was an earlier case, and it
12 A.
Are we finished with five through 11?
13 was in regard to excise taxes, and one of the -- or the
13 Q.
Yes.
14 decision in this case, one -- the decisions in this case that
14
MR. BECRAFT: May I approach, Your Honor?
15 defined what an excise tax was, because it was rather
15
THE COURT: You may.
16 confusing at that time. And in Flint versus Stone Tracy, the
16 A.
What number?
17 court said that excise taxes are those taxes laid upon the
17 Q.
19, 20, and 21. Do you have them in your hands?
18 manufacture, the sale and the consumption of commodities
18 A.
I do.
19 within the country. They're taxes laid upon the licensing of
19 Q.
Now, let me -- turn to file number 20.
20 certain occupations and also upon corporate privileges. Now,
20 A.
Okay. File number 20.
21 the thing that was really interesting about the Flint versus
21 Q.
Can you identify that for me, please?
22 Stone Tracy Company for me in regard to the income tax is that
22 A.
I can. This is a case that was heard in 1925. It
23 my earnings from FedEx, I'm a pilot, I'm not a manufacturer of
23 was -- it's entitled Sims versus Ahrens, and this case was
24 commodities, I -- my job is not a job that requires a special
24 heard by the Supreme Court of our neighboring state, Arkansas.
25 government privilege to do, and I'm not a corporation. So in
25 This was decided in Little Rock.
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469
Q.
What significance about this particular document
related to your tax beliefs?
2 regarding your tax beliefs?
2 A.
3 A.
3 the court in its ruling, one of the most significant things
Well, in the rendering of the decision in regard to the
I learned about privileges and what are privileges, and
4 ability of a legislature or a legislative body to tax, it says
4 that it said was that the individual, unlike the corporation,
5 the legislature has no power to tax for revenue purposes those
5 cannot be taxed for the mere privilege of existing. Said the
6 occupations that are of common right. It goes on to say that
6 corporation is an artificial entity receiving its -- excuse
7 the legislature does have the power to declare as a privilege
7 me, owing its existence and its charter powers to the state,
8 and tax for state revenue purposes those occupations which are
8 that the individual's rights to exist and own property are
9 not of common right. What this showed to me is that further
9 natural rights. The enjoyment therefore -- it's a little
10 substantiated that the income tax is an excise tax. It's tax
10 difficult the way they say it, it says the enjoyment of which
11 on commodities, corporations and licenses, but here Flint
11 an excise tax cannot be imposed. And what this confirmed for
12 versus Stone Tracy is saying that the legislature does not
12 me a little bit more was that my job, my occupation was that
13 have the power to tax occupations of common right. Well, my
13 of common right and that I have a natural right to existence
14 job as a pilot is an occupation of common right, anyone can do
14 and that a tax cannot be imposed on that right.
15 what I did, go out to the local airport, start taking flying
15 Q.
16 lessons, building the flying time and become a pilot. So this
16 bears the number 19. Is that something you read and relied
17 just substantiated for me one more piece of the puzzle that
17 upon?
18 was starting to fit into place and starting to build a
18 A.
This is something I read and definitely relied upon.
19 foundation which eventually was going to lead to my decision.
19 Q.
Okay. Tell us about it.
20 Q.
20 A.
This case is probably my favorite case, and perhaps
Let me direct your attention to that file, number 21,
Let me direct your attention to the file folder that
21 can you identify that for us, please?
21 it's because this case actually was heard in the Supreme Court
22 A.
22 of Tennessee, the Volunteer State. And this was Jack Cole
Yes, this is Redfield versus Fisher. This was a case
23 decided by the Supreme Court of Oregon over on the West Coast
23 Company versus Alfred T. McFarland, commissioner, this is a
24 and it's dated October 24th, 1930.
24 recent case, this is not -- the other cases were 1920s, 1930s
25 Q.
25 and prior to that. This was a 1960s case, and so it gave me,
What was it that you learned by reading that case that
472
471
you know, some recent substantiation in the puzzle that was
you have just described?
2 beginning to form for me. And the important part of this case
2 A.
3 that the court stated was that the realizing and receiving of
3 forms of taxes, direct taxes and indirect taxes. Indirect
4 income and earnings or earnings is not a privilege that can be
4 taxes had to be levied uniformly across the country. Direct
5 taxed. It says since the right to receive income or earnings
5 taxes were those taxes which were laid upon property and such
6 is a right belonging to every person, this right cannot be
6 like that and they have to be apportioned and the bill sent to
7 taxed as a privilege, and that was like one of the final
7 the state, not the individual. Pollock, in the dissenting
8 pieces in the puzzle as far as understanding why my right to
8 case, Justice White, identified income taxes as falling in the
9 earn a living in the form in which I chose was not a privilege
9 category and class of taxes known as indirect taxes and
10 that could be taxed.
10 therefore must be uniform. Brushaber in the Justice White
11 Q.
11 reconfirmed this. Flint versus Stone Tracy had defined for me
When was it that you engaged in this process of reading
From the Constitution, I learned that there were two
12 and studying these cases that you have just mentioned?
12 what an excise tax was, and I realized that my occupation did
13 A.
I'm sorry, say that again.
13 not fall under the categories of manufacturing, corporations
14 Q.
Okay. What's the time frame when you were reading this
14 or licenses. Redfield versus Fisher identified that as a
15 stuff?
15 natural human being, an individual that had the right to make
16 A.
16 a living could not be taxed and then, let's see Jack Cole
Oh, the time frame in this was '92, once after I had
17 first heard about the issue of tax, the truth in taxation
17 versus McFarland was the clincher, I had a right to earn a
18 movement in the Libertarian party, and 1990 through '95.
18 living, I and every other American citizen has a right to earn
19 Q.
Well, definitely before April 15th of 1996?
19 a living and that right cannot be taxed, and that really was
20 A.
Absolutely.
20 the final, I guess, piece of the puzzle that said, you know,
21 Q.
You had read all these cases?
21 something is amiss here. And I decided at that point in time
22 A.
Yes, I had.
22 that I was going to really take a stand on this and start
23 Q.
Can you give us a refined essence of your conclusion
23 seriously asking questions. I had been doing a lot of the
24 that you drew from reading and your studying of the
24 research, but I hadn't really been asking questions about it.
25 Constitution, its taxing powers and the series of cases that
25 And the -- of course, the IRS, each year -- I had been paying
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473
Ladies and gentlemen, we're going to start at
into taxes through my employer throughout all of this time,
2 and I -- up until '92 I had been filing my 1040 forms. But I
2 9:00 o'clock. That's a pretty good start time. You have
3 made the decision that I was not going to file a 1040 form,
3 to be here at 8:30, hopefully have had your snack and we
4 and then I would start asking some very serious questions of
4 will be ready to go. We should be ready to go right at
5 the organization who I thought should have the answers.
5 9:00. I don't think anybody is going to come about any
6 Q.
6 more repairs on my house tomorrow morning, although if
7
Let me get you to pull out file folders 1 through 4A.
THE COURT: Counsel, it sounds like we're
7 they do, I will stay and talk to them, I got to tell you
8 getting ready to be more specific on some questions, is
8 that. Is everybody okay on their -- we have no electrical
9 that right?
9 problems here, right, everybody is okay, and you don't
10
MR. BECRAFT: Yes, that's correct.
10 have any insurance problems, you got all your repairs
11
THE COURT: I think I would rather have all of
11 taken care of? All right. We're all working on it.
12 this on the same day so that it will be more easily
12
13 followed.
13 yourselves. Don't let anybody talk with you about it.
14
14 You heard a lot of references to cases and Supreme Court
MR. BECRAFT: Your Honor, we're here at the
Well, don't talk about the case among
15 pleasure of the court.
15 references and that sort of thing, and I know actually for
16
16 the people who are really computer driven and get home and
THE COURT: Well, I think that's -- I wish that
17 was true, but, anyway, that's a different thing.
17 get on that computer, it is tempting, and I'm just going
18
18 to remind you don't try to look anything up. That would
THE WITNESS: You have made it very
19 pleasurable. Thank you, sir. Thank you, Your Honor.
19 be very inappropriate. I will give you all the
20
20 information that you need from the law side in printed
THE COURT: We're here because we have a case
21 to try, and that's what -- I think we better do that.
21 form and also orally when we have the case submitted, and
22 That will make more sense tomorrow because otherwise we're
22 the government and the defense will argue the facts, so
23 going to start this portion of the testimony and then Mr.
23 don't do that. Don't speak to anybody on either side or
24 Murphy is going to start examining, and if we break it up,
24 anybody who is associated with any side. You should avoid
25 it will be confusing, we don't want to do that.
25 them. And if anybody tries to talk with you, of course,
476
475
THE COURT: Oh, I understand, and it's possible
you should report that to one of the court security
2 officers, a member of my staff or directly to me.
2 to mislay something.
3
3
And, again, continue to not watch anything on
All right. I need to ask a couple of questions
4 television, read anything in the newspaper or listen to
4 about the instructions. One question, I just want to ask
5 anything on the radio that might be about this case or
5 Mr. Murphy, it is very clear to me on Counts 2, 3, 4, 5,
6 cases like it. Well, continue to keep an open mind. We
6 6, 7, 8, 9 -- I'm sorry, 2, 3, 4, 5 and 6, that you are
7 have still only heard, frankly, a portion of the case and
7 relying on the failure to file -- the information on the
8 you need to keep an open mind until you have heard
8 Form W-4?
9 everything in the case, the final arguments of counsel,
9
10 the final instructions on the law and, of course, have had
10
THE COURT: As the affirmative act?
11 a chance to go back to the jury room and then discuss the
11
12 evidence among yourselves, and then make up your mind.
12
THE COURT: That's perfectly clear. And what
13
13 I've been trying to figure out, you probably knew what I
Ladies and gentlemen, thanks very much. We
14 will let you excused, we will see you at 8:30 tomorrow.
14 was trying to figure out -- and we will let you have a
15 We will start in here at 9:00. Thank you.
15 seat if you like -- is what is the affirmative act in
16
16 Count 1, and I'm not sure -- it can't be a failure to file
17
THE COURT: I have a couple of questions I want
17 and it can't be a failure to pay.
18 to ask you. I'm going to let you keep your materials, and
18
19 Mrs. Saba will re-check, because if we find something, we
19 and I don't mean to interrupt -- what it is going to be is
20 will get it to you. I have a feeling that -- I mean
20 that '95, what do you call it, W-4?
21 usually they do not remove anything from the courtroom,
21
THE COURT: There's a '95 W-4 also?
22 and usually when we leave it, it is locked except for the
22
MR. MURPHY: Yes, sir, and that was
23 custodial folks.
23 introduced --
24
24
25 well --
THE WITNESS: My mind, I could have very
MR. MURPHY: Judge, what it is going to be --
THE COURT: That was, that was. It's just not
25 stated and I wanted to be sure. So we're relying on W-4s
478
477
throughout?
failure to file is different, of course.
2
2
3
THE COURT: Okay. That was the first question.
3
THE COURT: In the Alamo case, we gave both
4 The second question was, is the government going to oppose
4 failure to file charges and other charges. It was not a
5 the giving of the lesser included offense charge? You
5 7201 case. Well, will you think about that?
6 know, we usually don't do that, and I think there's some
6
7 authority that says that we don't have to give that. In
7
THE COURT: I kind of need to know that fairly
8 other words, I don't have to give lesser included offense
8 early.
9 language, but -- but what does the government want to do?
9
10
10 the morning.
MR. MURPHY: Judge, you know, I have been so
MR. MURPHY: I will let you know first thing in
11 busy getting ready for this thing, I haven't really
11
THE COURT: I'm not real sure about that. And
12 thought about it. Part of the problem you have got is
12 then on some of the things like the Privacy Act and so
13 some of the case law that -- I have read some cases on it,
13 forth, I haven't heard anything, we haven't gotten all the
14 you can have a failure to -- failure to file and evasion
14 way through the material, you know, I mean I view this as
15 are two different crimes.
15 a pretty straightforward good faith question, good faith
16
THE COURT: They're different crimes.
16 defense, and whether the jury agrees or not is a jury
17
MR. MURPHY: Because you can have an evasion
17 question.
18 with the filing.
18
19
THE COURT: Well, sure, you can.
19
THE COURT: But what is your position on this?
20
MR. MURPHY: Bogus tax.
20
MR. MURPHY: Well, Judge, I don't think the
21
THE COURT: False information contained in the
21 jury ought to be instructed on all this other law they
22 return, misstatement of various -- all sorts of things can
22 have cited in the jury instructions for this reason: It
23 be done in a return.
23 doesn't matter what the law is. What matters is her good
24
MR. MURPHY: Sure.
24 faith belief.
25
THE COURT: That create a false filing. A
25
THE COURT: That's correct. That's correct. I
480
479
think you're right on that. I'm not going to take the
possibility I might just say forget him.
2 final arguments on that right now. But that -- that's
2
3 kind of been the focus. I'm trying to get a set of
3 thought process.
4 instructions that we can work from.
4
5
MR. MURPHY: Right.
5 court.
6
THE COURT: I'm going to go back and refer to
6
THE COURT: Well, I don't want to get into your
MR. BECRAFT: Okay. I'm just telling the
THE COURT: I think you're warning Mr. Murphy
7 the W-4s throughout, and that's where I'm going to be on
7 and me that we may be to the jury pretty quickly, and I do
8 that. I suppose you could argue other things, and so I'm
8 appreciate that. Okay. Gentlemen and ladies, we will see
9 not going to -- I'm giving a little more instruction on
9 you tomorrow at 9:00 o'clock.
10 what is an affirmative act of evasion. I'm just going to
10
11 give a little more instruction on that and make it
11
MR. BECRAFT: Thank you, Judge.
12 perfectly clear that omissions are not acts of evasion.
12
13
13
14
14
15
MR. MURPHY: And I have I have no objection to
15
16
16 that.
17
THE COURT: It's a little helpful to me.
17
18
Are we going to have any witnesses after --
18
19
MR. BECRAFT: Your Honor, I think we have got
19
20 one witness that -- we were going to bring one in, but I
20
21 think we have got enough stipulation on that or at least
21
22 Mr. Murphy is not going to object, and I was going to meet
22
23 with one other witness tonight, but, you know, I might
23
24 after -- he wouldn't be -- his name is Don Winfield, he
24
25 wouldn't be but about 30 minutes, but there's a distinct
25
482
WESTERN DIVISION
)
Plaintiff,
)
)
VS.
)
)
)
VERNICE KUGLIN,
)
)
Defendant.
)
NO. 03-20111-Ml
AUGUST 6, 2003
VOLUME III
BRENDA PARKER
OFFICIAL REPORTER
APPEARANCES
209 LINCOLN STREET
484
483
WITNESS INDEX
WITNESS
PAGE LINE
EXHIBIT INDEX
EXHIBIT NUMBER
PAGE LINE
Exhibit Number 28
2-3-53 Document
506
16
DIRECT EXAMINATION (CONTINUED)
Exhibit Number 29
1997 Annual Report
507
9
BY MR. BECRAFT: ....................... 499 11
Exhibit Numbers 30
507
24
CROSS EXAMINATION
Exhibit Number 31
1040 Instructions 1993
508
1
BY MR. MURPHY: ........................ 568 19
Exhibit Number 32
1997 26 CFR 5601.602
508
22
Exhibit Number 33
1998 26 CFR 5601.602
508
24
BY MR. BECRAFT: ....................... 627 13
Exhibit Number 34
1999 26CFR 5601.602
509
1
Exhibit Number 35
Cole v. McFarland Case
509
23
Exhibit Number 36
1975 1040 Instructions
518
23
Exhibit Number 37
IRS Bulletin
538
11
Exhibit Number 38
1993 Form 2555 Instruction
5
13
Exhibit Number 39
1993 Form 2555
538
15
Exhibit Number 40
1916 Treasury Decision
544
9
Exhibit Number 41
October 18, 1995 Letter
558
4
Exhibit Number 42
November 25, 1995 Letter
558
6
Exhibit Number 43
Flora Case
571
15
Exhibit Number 44
1992 Tax Return
574
9
Exhibit Number 45
1988 Form 1040
576
7
Exhibit Number 46
1990 W-4 Form
578
13
Exhibit Number 47
Blank Form 1040
580
12
Exhibit Number 48
October 31, 1995 Letter
583
24
Exhibit Number 49
June 16, 1997 Letter
584
21
VERNICE KUGLIN
1040 Instructions 1992
485
486
Exhibit Number 50
585
12
Exhibit Number 51
585
20
Exhibit Number 52
586
25
2
Exhibit Number 53
July 6, 1999 Letter
587
13
3
Exhibit Number 54
October 30, 2000
588
11
4 Wednesday, August 6, 2003, at 9:00 o'clock a.m., when and
Exhibit Number 55
Tax Returns
601
6
Exhibit Number 56
CFR Passages
605
5
6 follows:
Exhibit Number 57
1993 Instructions
621
1
7
Exhibit Number 58
1995 1040 Instructions
625
24
8
WEDNESDAY MORNING & AFTERNOON
AUGUST 6, 2003
The trial in this case resumed on this date,
____________
9
10
MR. MURPHY: Judge, Ms. White is not here, but
11 she has gone to get some exhibits.
12
THE COURT: Do you need to wait on her?
13
MR. MURPHY: No, we don't need to wait on her.
14
MR. BECRAFT: Your Honor, could we take up a
15 matter, an evidence question before we bring in the jury?
16
THE COURT: Sure.
17
MR. BECRAFT: I anticipate that Mr. Murphy has
18 got a lot of objections to some of the proposed exhibits
19 that we're going to offer. With reference to that
20 category of exhibits, I'm proceeding with this in mind,
21 and I would like the court to either approve or
22 disapprove. It may take some arguments, and I think it is
23 going to be more beneficial for us to argue the bulk of
24 these motions outside the presence of the jury maybe
25 before a break or after a break or sometime after the
488
487
defendant gets off the stand.
to offer are letters from a CPA and an attorney, I believe
2
2 it is, that represented Ms. Kuglin, and our position would
THE COURT: Have you shown the materials to Mr.
3 Murphy?
3 be that those are clear hearsay. They're not -- they
4
4 don't fit the state of mind exception.
MR. BECRAFT: Your Honor, I gave the government
5 premarked exhibits.
5
6
MR. MURPHY: Yes.
6 have relied on?
7
THE COURT: I think the answer is yes. Do we
7
MR. BECRAFT: Yes.
8 have objections.
8
MR. MURPHY: Well, Judge, here is the problem.
9
9 I don't think she can claim to rely on those letters,
MR. MURPHY: Judge, as I said yesterday, and
THE COURT: Are they letters that she claims to
10 just generally, my objections generally fall into three
10 because at the time they were in the midst of a
11 categories. There are Supreme Court cases and IRS
11 controversy over the tax matter, and if you look at -- if
12 materials, and I would be of the opinion that those are
12 you look at, I think it's 803, the state of mind
13 admissible.
13 exception, it clearly says that you can't offer
14
THE COURT: Are admissible?
14 something -- a statement of belief to prove that belief.
15
15 And I would submit that's what you're doing in this case.
16
16 It's 803(3), Your Honor.
17
MR. MURPHY: And then there are, for lack of a
17
THE COURT: Oh, I'm not looking for that. I'm
18 better word, tax protester type materials that may or may
18 looking for the good faith -- bases for good faith. I
19 not have extensive legal citations. In fact, one of
19 don't know whether or not a person can rely on -- are
20 those, it talks about jury nullification and urges people
20 these -- I just have to look at the two letters, whatever
21 to nullify verdicts. Clearly, some of the text of that
21 they are, and see whether they're something on which a
22 may come in, but the document itself wouldn't, and I think
22 person can rely, and I haven't seen those.
23 the defendant would be allowed to read from it, but I
23
24 think we need to know in advance what portion she is going
24 them now?
25 to read. And the last group of materials that they seek
25
MR. BECRAFT: Would the court like to look at
THE COURT: Sure.
490
489
MR. BECRAFT: Either my copies or hers. Ms.
exception. These are hearsay. And -- and -- clearly, so
2 Kuglin, have you got 43, 44, 45, 46?
2 as a general proposition, they're not admissible.
3
3 Sometimes a person can obtain an opinion, for example,
4
4 from -- well, from a CPA, and the CPA can state that they
5 Honor?
5 have determined that no tax is owed on a particular -- or
6
6 as to a particular individual, and that they state that
THE COURT: Why don't you hand them to me, I'm
7 the one that has to look at them? Oh, okay. You're
7 that as a CPA in a professional capacity and advise the
8 right, it doesn't matter. I don't think this letter from
8 client that they need not pay any tax on this particular
9 Thomas Roberts states an opinion in which a person can
9 point.
10 rely. This is the one dated November the 26th, 1997.
10
11 This one of -- I don't think this one of December the 8th,
11 letters, Your Honor.
12 1997 also states an opinion on which a person can rely or
12
13 even suggest that there's an opinion attempting to be
13 they're not opinion letters. Had they been opinion
14 stated on which a person can rely. I don't think this one
14 letters, they would be in a different category, that's
15 of January the 20th, 1997 also states an opinion upon
15 true.
16 which a person could rely from a professional. They just
16
17 talk about request for documents which are not opinions on
17 information to the court on this point?
18 which a person can rely. Well, the letter from Mr. Pope
18
THE COURT: Sure, sure.
19 also does not state an opinion upon which a person can
19
MR. BECRAFT: I had lined up to deal with the
20 rely, as far as I can tell.
20 authenticity question. These letters come from Florida,
21
21 and I had a secretary in an office that was going to come
MR. BECRAFT: Your Honor, can I explain the
MR. BECRAFT: These are not offered as opinion
THE COURT: Well, that's what I understood,
MR. BECRAFT: May I offer additional
22 letters?
22 up and prove the mailing of the letters. I don't think
23
THE COURT: Excuse me?
23 the government is making an objection, we have agreed,
24
MR. BECRAFT: And the purpose?
24 although the court is hearing about this for the first
25
THE COURT: Well, they have to fall into an
25 time, that the question doesn't relate to authenticity.
492
491
What we're offering them for is not for opinion or
apparently, and we will come back and look at this, but I
2 anything else, but what -- the point that we're offering
2 think probably -- well, we will come back and talk about
3 them for is that at Ms. Kuglin's instructions, these
3 it for a second.
4 gentlemen -- they're tentatively marked 43, 44, 45, 46,
4
5 just the numbers that appear on the documents, they're
5
THE COURT: All right. Anything else from the
6 offered for the purpose of showing that Ms. Kuglin said or
6 United States on these letters?
7 asked questions through her lawyers to the Internal
7
8 Revenue Service to answer, and she also makes statements,
8
THE COURT: Anything else from the defense?
9 there is letters -- there's statements in here we're
9
MR. BECRAFT: Yes, Your Honor. These four
10 willing to pay, the only thing we want to do is we want to
10 letters, there is a series of documents that I consider to
11 have answers to our questions. For example, you know,
11 be the core of the defense. First is the documents that
12 just to demonstrate to the court, the one that is labeled
12 have already been admitted in evidence, it's the exempt
13 43 that is dated November the 26th of '97 by Tom Roberts,
13 Form W-4 dated December, 1995, that is authored by Ms.
14 it says specifically kind of at the bottom of the page --
14 Kuglin. Thereafter, in order of importance about exhibits
15
15 that we're going to cover this morning are two documents
THE COURT: I have read it already, sure. Our
16 client is not refusing to pay and, in fact, will pay any
16 that she submitted herself in October and November of
17 lawful tax owed once the Internal Revenue Service complies
17 1995. Subsequent to that time, we had this series of
18 with our request as outlines in this document and, of
18 letters Ms. Kuglin was asked or asked these people, Tom
19 course, it begins earlier, since our client has never been
19 Roberts and Mr. Pope to write letters on her behalf to the
20 given documents by the IRS, which clearly state specific
20 Internal Revenue Service asking her fundamental questions
21 taxes the IRS claims -- see, that's not how it works,
21 and, likewise, at the same time offering to pay.
22 unfortunately, or however you want to look at it. In our
22
23 system, the IRS doesn't send them a bill, you send them in
23 position that it goes to her state of mind, which is the
24 materials which are reported.
24 most important factor that I think the jury has got to
25
25 decide in this case. She read these letters. She said
I need to go take a phone call in the back,
Now, under -- that being the case, it is our
494
493
that she would make an offer -- she would pay the IRS, she
excluded by the hearsay rule even though the declarant is
2 had no objections to paying the tax, she just wanted her
2 available as a witness; three, then existing mental,
3 questions answered. That, Your Honor, goes to reliance,
3 emotional or physical condition. A statement of the
4 state of mind as well as intent, and these -- these
4 declarant's then existing state of mind, emotion,
5 letters are real important for the intent question, what
5 sensation or physical condition such as intent, plan,
6 was her frame of mind. She wanted her questions answered,
6 motive, design, mental feeling, pain and bodily health,
7 she was willing to pay, and to me, that -- those are real
7 but not including a statement of memory or belief to prove
8 important facts that demonstrate a lack of intent to
8 a fact remembered or believed unless it relates to the
9 commit tax evasion.
9 execution, revocation, identification or terms of
10
10 declarant's will. So this particular exception to the
MR. MURPHY: Judge, if you look again at
11 803(3), this is being offered as a statement of belief to
11 hearsay rule does not apply to the letters submitted from
12 prove the belief, and it's not admissible. We're -- where
12 Mr. Roberts and from Mr. Pope. Objection by the United
13 these letters emanated from was an IRS proceeding to levy
13 States is sustained.
14 on the defendant's property, and what that -- what that
14
All right. Anything else?
15 would tend to do, I would submit to the court, is create a
15
MR. MURPHY: Yes, sir, Your Honor, you wanted
16 situation where there was a motive to lie, and the
16 me to advise the court what our position would be as to a
17 reliability factor that you typically have in a hearsay
17 lesser included offense.
18 statement, because it's on the spot type of thing just
18
THE COURT: Yes, I did.
19 wouldn't apply, and, therefore, we would submit that they
19
MR. MURPHY: And our position is going to be
20 ought not to come in. They're just hearsay, there's no
20 that the jury should not be charged with the lesser
21 way around it.
21 included offense given the nature of the charge in this
22
22 case.
THE COURT: Well, the exception that's asserted
23 by the defense is 803(3), as I understand, and the
23
THE COURT: Anything from the defense on that?
24 government simply argues that it doesn't apply. That rule
24
MR. BECRAFT: Well, I offered one, I offered a
25 as to hearsay exception says the following are not
25 lesser included instruction.
496
495
MR. BECRAFT: One other matter, Your Honor,
THE COURT: Right, but -2
MR. BECRAFT: I think under the facts of this
2 before the -- we dealt with the letters. The only other
3 case, the indictment alleges, if part of the offense is
3 point is that should we, on a piece-meal basis, handle the
4 committed by a willful failure to file. My position is
4 rest of the exhibits or should we take them up outside the
5 that terminology -- just by the plain terms of the
5 presence of the jury was my offer?
6 indictment itself includes the lesser included offense and
6
7 willful failure to file, 7203.
7 looked at each of the -- Supreme Court cases and materials
8
8 from the Internal Revenue Service can be used. I mean
MR. MURPHY: But, Judge, if you look at the
THE COURT: Well, you know, the -- I haven't
9 defense they're offering, as I understand it, what the
9 they're published materials, they're available for
10 witness has testified to, she had no duty to file a tax
10 everybody, and the law allows an individual to rely on
11 return, and that's just not consistent with the defense
11 Supreme Court decisions, it allows individuals to rely
12 that's offered.
12 upon IRS materials, and so those can be used.
13
13
THE COURT: Well, there is discussion about the
As to materials by other people or entities,
14 inclusion of lesser included offense in pattern jury
14 they fall in the same problem as any other type of
15 instruction 8.07 of the Sixth Circuit pattern jury
15 hearsay, and unless it is a learned treatise on tax law,
16 instructions, and this does not appear to be a case where
16 certainly read from and not necessarily have been
17 the court should include the lesser included offense
17 admitted, but refer to that sort of material, but it has
18 instruction, so I'll sustain the position by the United
18 to meet some test to show that it is -- that it falls in
19 States.
19 the an exception of the hearsay rule. Otherwise, we would
20
There's some discussion of this in the notes
20 get up and read from the Marvel Comics or the Wall Street
21 contained with -- or the comments contained with 8.07, and
21 Journal either one, and it would not be -- although parts
22 I do agree with the United States that this is not --
22 of the Journal -- part of the Journal are judicial notice
23 certainly not required and it's not appropriate in my
23 materials like the interest rate portions, but articles in
24 determination in this case. That takes care of that
24 the newspaper would not be admissible themselves. So I
25 point.
25 think that -- we know that they will not be admissible.
498
497
THE COURT: We have covered the things that you
Now, that's our situation. If -- how much material do we
2 have like that?
2 listed as 43, 44, 45, 46. Ms. Kuglin's own correspondence
3
3 to the agency typically not admissible as a general
MR. BECRAFT: Well, Your Honor, I slipped to
4 the court a proposed exhibit list. I have committed a
4 proposition because everybody can write their own material
5 grave error by numbering mine in advance. Bad habits stop
5 and then would be able to introduce into evidence, but
6 slowly, Your Honor. But you can take a look at the
6 sometimes it's received because there's no opposition, as
7 exhibit list, and what I will do -- I think it's something
7 an admission, for example. So I don't know what the
8 we can probably take care of in short order outside the
8 government will say about those things.
9 presence of the jury is all I'm saying. I could lay the
9
10 foundation for some of these documents. I'm not going to
10 I will move them into evidence as we take them up.
11 offer a lot of these. I will take into consideration what
11
12 the court has already said and move some of that in, but
12 come up? I did get the list though, thanks.
13 there's some that I think probably require a separate
13
Are we ready?
14 consideration, separate arguments that I anticipate coming
14
MR. BECRAFT: We are, Your Honor.
15 from Mr. Murphy.
15
16
16
17 these various opinions, interesting question about using
17
THE COURT: Everybody can be seated. I'm sorry
18 the ones that are very old, but I think you can clarify
18 we're starting a little late. The -- we did take up some
19 them. CFR, there's no question about that, is there, Mr.
19 documents that -- as to which objections could be dealt
20 Murphy?
20 with in advance and ruled on those rather than our doing
21
21 those at side bars. There are going to be some other
THE COURT: Well, you have a lot of things,
MR. MURPHY: No, sir, Your Honor, I believe
MR. BECRAFT: I'll do whatever the court wants.
THE COURT: Why don't we deal with them as they
22 that's admissible.
22 documents that as they come up, we will probably try to
23
23 deal with at side bar. If we can't do it quickly, we will
MR. BECRAFT: And we have some forms, but then
24 there's a lot of other material that is not IRS and
24 take another break and deal with them. That way, we're
25 everything else.
25 not causing you to have to sit out here while we're trying
500
499
to sort through the objections under the Rules of
you a document that's called file folder one?
2 Evidence.
2 A.
Yes.
3
3 Q.
Okay. Now, is this something that during that time
The Rules of Evidence do dictate which type
4 documents can be received and the reasons that they can be
4 frame that I just mentioned, is this something that you read
5 received, and it does take a little bit of time to go
5 and relied upon?
6 through each document to make sure they can come in or
6 A.
7 not. I think we're ready to proceed.
7 conventions and listening to different speakers, I picked up
8
8 fliers, information, newspaper articles and such like that
9
THE COURT: Go right ahead.
9 which substantiate or which discuss -- did not substantiate,
10
DIRECT EXAMINATION (CONTINUED)
Yes, it is. As I was going to the different
10 but discussed and raised questions which became kind of a road
11 BY MR. BECRAFT:
11 map for the rest of my study.
12 Q.
12 Q.
Ms. Kuglin, yesterday we had finished a particular
Is there something that you read in this -- identify
13 topic, and I would like to move on to a different aspect of
13 for me, please, this number one.
14 your testimony.
14 A.
15
15 Who Is Required To File A Tax Return. It's written by a lady
Between 1992 and early 1995 or maybe late 1995, can you
The first exhibit or this first document is entitled
16 describe for us what you were doing in reference to generally
16 by the name of Claire Kelly, and she was a columnist who had
17 studying the income tax laws?
17 done a lot of research in the arena of taxation.
18 A.
18 Q.
Well, after I had reviewed the cases and the
And what was the general theme that you gathered from
19 constitutional restrictions on taxation and the other study
19 this and how did it relate to your beliefs?
20 materials I had, I had come to the conclusion that there was
20 A.
21 definitely a question about whether or not I was liable for
21 yesterday in regard to direct taxes, indirect taxes. She
22 the income tax. So I decided it was time that I really delve
22 quoted Supreme Court cases such as the Brushaber case, the
23 into the tax code itself and the 1040 form, which is a
23 McFarland case and just a little bit more explanation as to
24 document that the IRS has asked Americans to complete.
24 the fact that the source of income was very, very important in
25 Q.
25 deciding whether or not that income fell in the category of
Let me stop you right there. Do you have in front of
The general theme was much of what I had discussed
502
501
direct taxes which the federal government could only levy a
that there are taxpayers and there are tax payers. Taxpayers
2 portion -- excuse me, through apportionment and send the bill
2 are those which are entities of the government, corporations,
3 to the state, and that -- which was considered the source
3 trusts and things like that, and then there are individuals
4 which fell under excise taxes or indirect taxes which had to
4 who are tax payers. They pay the indirect taxes, the gas
5 be uniform throughout the state.
5 taxes, the wheel taxes and such like that. So it gave me a
6 Q.
Now --
6 much clearer understanding that not everybody is considered a
7 A.
Or the country.
7 taxpayer.
8 Q.
Could I get you to identify the next document that has
8 Q.
Let me direct your attention to the next document that
9 a two on it?
9 has a three on it.
10 A.
10 A.
This document is entitled Who Is a Taxpayer? And this,
This document is entitled -- excuse me -- this document
11 again, is an article written by Claire Kelly. You want me to
11 is entitled Deceptive IRS Code Words, and it was published by
12 continue?
12 an organization entitled the Free State Constitutionists. And
13 Q.
13 this talks about the words income, the word person, the word
Yes, tell us what you gathered from reading that
14 document.
14 taxpayer, shall and must. And it discusses the fact that the
15 A.
15 common everyday usage of certain words is not necessarily the
One of the first things -- it starts out by saying the
16 revenue laws are a code or a system of regulation, a tax
16 legal usage of that word. And I would say an example that I
17 assessment and collection. They relate to taxpayers and not
17 found in my personal life that if somebody in my generation,
18 to nontaxpayers and what this placed in my mind was the idea
18 somebody walked up to me and said, Ms. Kuglin, you are bad.
19 that not every one is a taxpayer, and the article goes on to
19 Well, I didn't have a very good feeling because I considered
20 say that the income is allaying of an excise tax upon a
20 that to be a derogatory statement towards me. The younger
21 taxable event, that the income tax law or -- that was
21 generation, someone comes up to me and says, Ms. Kuglin, you
22 initially debated in 1909 and then passed in 1913 was actually
22 are bad, then I understand that they're not being derogatory
23 originally named the corporation tax of 1909. And it goes --
23 to me, they actually are paying me a compliment, and so we
24 the article goals on and quotes some of the court cases that I
24 have to understand what the semantics of words mean, and
25 talked about yesterday, Redfield versus Fisher, and explained
25 that's what this document really laid out for me. The idea
504
503
that income is determined by where the source is, that the
A.
2 named person can mean an individual, it can be a corporation,
2 Q.
3 it can be a trust, a savings and loan association, a
3 began your study?
4 homeowners association. The person can either be a live being
4 A.
Yes, yes, I did.
5 or it can be an artificial entity, and -- so you have to
5 Q.
And you read it?
6 understand the context in which the code or the regulations
6 A.
Yes, I did.
7 use the term person. Taxpayer, again, as Claire Kelly defined
7 Q.
Did you acquire certain information by reading the
8 taxpayer could either mean a taxpayer, corporation, entity or
8 document?
9 person, or it could be a tax payer, somebody who voluntarily
9 A.
10 pays their -- you know, pays the indirect tax, sales taxes and
10 another document. I did not order the document, but what
11 such. Then they come to the word shall and must. Now,
11 struck me was that this was in USA Today, a fairly prominent
12 typically, we think that the word shall is mandatory. But
12 paper, it was an advertisement that an attorney at law took
13 there are court cases, and it covers -- let me read through
13 out, a man by the name of James Knowles, and it says that
14 here just quickly. Well, I'm not placing my eyes right now on
14 James Knowles spends his year penetrating the owners Internal
15 the court cases that talk about this, but it said that the
15 Revenue Service Code to find that most likely you don't have a
16 words must and shall are applied in relationship to a
16 liability to pay a set of taxes. He's a member of the
17 liability or a requirement. In other words, if you have a
17 California bar and has practiced law for 34 years, since his
18 liability, then you must. But then if there is no liability
18 graduation from prestigious Hastings School of Law.
19 or requirement for specific tax, but a person voluntarily
19
20 decides that they want to go ahead and pay it, then it is used
20 information was that it wasn't -- I was not the only person
21 in the term may. Yes, you may be -- you may do whatever you
21 asking or beginning to question my liability status, that
22 want to. If you feel that you want to pay a tax that you have
22 there were attorneys, there were people who were publishing
23 no liability for, there's nothing that stops you.
23 this information and asking the questions in national
24 Q.
24 newspapers and such like that.
Let me move on the next exhibit, number -- it has a
25 number on it, 5 or 4A.
4A. This is a newspaper --
25 Q.
You acquired this during your early days in which you
Yes, I did. This was really an advertisement for
The importance of -- or what I found in this
Let me direct your attention to a document that is
506
505
labeled 4A.
the front.
2 A.
2 A.
Yes.
3 And this -- I'm not quite sure how I attained it, but it was
3 Q.
I believe you talked about that yesterday.
4 from the Mutual Assistance Plan, which is an organization out
4 A.
Yes.
5 in Pima, Arizona at that time, and this was during the same
5 Q.
Is this something you read and relied upon?
6 time period as I was trying -- gathering information trying to
6 A.
Yes, it is. It was one of the first documents I got.
7 find clues to the answer of the liability of income tax. And
7
8 it states: Liability is established by voluntary assessment.
8 move for the admission of the document she has in her hand
9 Now, some of the cases that were mentioned in this -- and this
9 that I have a big 5 on in the lower right -- left corner.
10 article actually directed me to the -- to finding the
10
11 Brushaber case, the Flint versus Stone Tracy case and some of
11
THE COURT: It is received as the next numbered
12 the others. And it says that before World War II, payments or
12 exhibit.
13 profit received by individuals in even exchange for their
13
14 labor were not connoisseured to be subject to income taxes.
14 give it to the clerk?
15 And, of course, we know in Brushaber, it says -- Brushaber
15
THE COURT: Yes, it will be 28.
16 defined the word income because Congress had not defined it.
16
17 As a matter of fact, in the debates, congressional debates on
17 2-3-53 Document.)
18 the 16th Amendment, which are very fascinating, I would
18
19 encourage everybody to read, Congress -- the legislature could
19 put these papers right here?
20 never come up with a definite definition of the word income as
20
21 applicable taxes, and it was understood that they were
21 Q.
22 considered to be excise taxes and, therefore, fell under the
22 big 6 on.
23 uniformity clause.
23 A.
Yes.
24 Q.
Let me direct your attention to -- let's go back to
24 Q.
Is this something you read and relied upon?
25 something we covered yesterday, the document that has a 5 on
25 A.
Yes, it is.
This document is entitled Must You Pay the Income Tax.
MR. BECRAFT: Your Honor, at this time, I would
MR. BECRAFT: Your Honor, can I approach and
THE WITNESS: Your Honor, is it all right if I
THE COURT: Sure, that's no problem at all.
Yesterday, you talked about the document that I have a
508
507
Q.
Does it appear to you to be an official document?
2 A.
It does. Actually, this is a copy of the official
2 1040 Instructions 1993.)
3 government document.
3
4
MR. MURPHY: I have no objection, Your Honor.
4 Honor?
5
THE COURT: All right. We will make that 29, I
5
6 Q.
6 think.
THE COURT: You may.
Can I get you to take a look at the document that had
7
7 the -- the series of documents that have 13, 14 and 15 on
8
THE COURT: 29.
8 them?
9
9 A.
I have them.
10 1997 Annual Report.)
10 Q.
Those are official government documents, is that
11 Q.
11 correct?
Do you have in your hand the ones that have 6, 7 and
12 8 -- 7, 8 and 9, I'm sorry. No, 7 and 8.
12 A.
Yes, they are copies of the 26 CFR, Chapter 1.
13 A.
7 and 8, I was getting a little confused here.
13 Q.
And we discussed those yesterday?
14 Q.
Correct me if I'm wrong, these are parts of the '92 and
14 A.
Yes, we did.
15 '93 instruction book for Form 1040?
15 Q.
And you relied upon them?
16 A.
Yes, they are.
16 A.
Yes, I did.
17 Q.
You relied upon them and you covered the substance of
17
MR. BECRAFT: Your Honor, I move for the
18 them yesterday?
18 admissions of the documents that has 13, 14, and 15 on
19 A.
19 them.
Yes, on the fact that it was a voluntary tax system.
20
21 admission of these two.
21
THE COURT: Certainly. They will 32, 33, 34.
22
MR. MURPHY: I have no objection, Your Honor.
22
23
THE COURT: It's 30 and 31.
23 1997 26 CFR 5601.602.)
24
(Exhibit Numbers 30 was marked. Description:
24
20
25 1040 Instructions 1992.)
25 1998 26 CFR 5601.602.)
510
509
else. Either yesterday afternoon or this morning, you
2 1999 26CFR 5601.602.)
2 mentioned something about the Internal Revenue Code, and can
3 Q.
3 you describe for us -- I'm looking at something on your --
Ms. Kuglin, yesterday, we talked about a document,
4 number 19, it's a court case.
4 within reach of your left hand, that's kind of either a blue
5 A.
5 or purple cover, is that something that you bought?
Excuse me.
6 A.
Yes, it is.
7 May I approach?
7 Q.
And what was it?
8
THE COURT: You may.
8 A.
This is entitled -- this is the July, 1994 edition of
9
MR. BECRAFT: I stuck it in my stack.
9 the complete Internal Revenue Code.
10 Q.
Let me hand you a document that has a big 19 at the
10 Q.
6
MR. BECRAFT: Your Honor, I have it up here.
And when did you -- would you have acquired that at
11 bottom of it.
11 least in the latter half of '94?
12 A.
Yes.
12 A.
Yes, sir.
13 Q.
Is that one of the documents or court cases we
13 Q.
Were there certain studies in which you engaged that
14 discussed yesterday afternoon?
14 related to the Internal Revenue Code?
15 A.
Yes, it is.
15 A.
16 Q.
You read and replied upon it?
16 on earlier, two of the sections of the code which were
17 A.
Yes, I did.
17 specifically specified in those documents as sort of being a
18
There were, and on the documents that I had commented
18 road map to the understanding of this issue on liability were
19 admission of that case.
19 two of the sections, 6001 and 6011 of the code. So I wanted
20
20 to buy a code so I could actually look into it and begin to
21
THE COURT: It will be the next numbered
21 try to find out for myself whether there was validity to the
22 document, which is 35.
22 arguments that I had been hearing.
23
23 Q.
Well, tell us what you did.
24 Cole v. McFarland Case.)
24 A.
Well, the 1040 form has -- let me get my 1040. I had a
25 Q.
25 1040 form as everybody else does or generally every one else.
Now, Ms. Kuglin, let's move on to a little something
512
511
Q.
Let me stop there. It sounds like you're reaching for
that area to find out what the Privacy Act was?
2 a document, would that have a big 23 on it? Is that what
2 A.
Yes, I did.
3 you're doing? Oh, okay. Go ahead.
3 Q.
Can you tell us what you did?
4 A.
4 A.
Yes. I got the -- went to the law library and read --
This is just my prop here. And so in trying to find
5 out or answer my own questions, there's an instruction page on
5 excuse me, read the case on the Privacy Act. I found out that
6 the 1040 form.
6 the whole purpose of the Privacy Act was because the
7 Q.
7 government or the agencies were sending out a lot of forms. I
Can you identify that document that you have in your
8 hand a little bit more completely?
8 think they dream up forms in their sleeps, and people were
9 A.
Yes, I will. This is the 1995 Form 1040.
9 beginning to get confused as to whether or not the forms that
10 Q.
Instruction booklet?
10 were being sent out were required to be returned, whether they
11 A.
Instruction booklet, that's correct.
11 were necessary and believed that one OSHA regulation had
12 Q.
What in there was of importance to you?
12 almost 400 forms, and so people were going to their
13 A.
The instruction page entitled the Privacy and Paperwork
13 Congressmen and saying, look, we need some kind of idea or get
14 Reduction Act Notice.
14 a handle on this river of paperwork that's coming out. So in
15 Q.
Tell us about that.
15 1974, the -- Congress passed legislation that basically said
16 A.
Well, it says the Privacy Act of 1974 and the Paperwork
16 any agency of the government which was asking for information
17 Reduction Act of 1980 say that we -- say that when we ask you
17 or producing information gathering documents must comply with
18 for information, we must first tell you our legal right to ask
18 the requirements which I just read, what the authority is to
19 for the information and why we are asking for it and how it
19 require the document, what the purpose is, what could be done
20 shall be used. We must also tell what could happen if we do
20 with it and whether or not it was voluntary or mandatory and
21 not receive it and whether or not your response is voluntary.
21 any repercussions that could happen if the document was
22
22 mandatory.
Now, I -- as I was interested in all the other issues,
23 I wanted to find out what this Privacy Act was all about, how
23 Q.
24 it came about and --
24 Privacy Act itself, what did you do in reference to the income
25 Q.
25 tax?
Let me stop you right there, did you do some study in
After you studied this matter that you thought was the
514
513
A.
Well, it says further down in the instructions, the IRS
Privacy Act notice appearing in the 1040 instruction booklet,
2 complies with the requirement of telling the authority. It
2 and once you obtained the Internal Revenue Code, can you lead
3 says our legal right to ask for the information is the
3 us through what you did when?
4 Internal Revenue Code's Section 6001, 6011, and then later on,
4 A.
5 they added the 6012. So I thought, well, these are the
5 regulation which gave the IRS the authority to ask me to fill
6 regulations that require me to file the 1040 form. I think I
6 out the 1040 form, and what that section, in essence, says is
7 probably ought to read what those sections say.
7 that every person liable for any tax under this title shall
8 Q.
8 keep such records, render such statements, make such returns
Is that one of the reasons why you obtained the
Yes. I went to 6001, because it said that that was the
9 Internal Revenue Code?
9 and comply with such rules and regulations as the secretary
10 A.
Yes, it is.
10 from time to time may prescribe. It then goes on to say that
11 Q.
Well, tell us what you did after that.
11 whenever the secretary feels it necessary, he may upon -- he
12 A.
Well, after I got my Internal Revenue Code, I started
12 may require any person by notice upon such person to make such
13 to get acquainted with it. I found out that there were --
13 returns, render such statements and keep such records as the
14 there was not just an income tax in the Internal Revenue Code,
14 secretary deems sufficient to determine whether or not such
15 that this book itself covered over 85 different taxes, that
15 person is liable for any tax.
16 the code is divided out into different sections. You have the
16
17 income tax, you have estate tax, gift tax, employment taxes,
17 probably say something like every American who earns wages is
18 excise taxes, alcohol, tobacco and firearms and procedures.
18 liable for the income tax or the individual income tax and,
19 And I found out, turning to the initial section, that the
19 therefore, must fill out the 1040 form. But that, as you can
20 section under income tax has about almost 1600 sections in
20 tell, is not what it said. It said every person, and as we
21 that part of the code. Now, there's almost, I believe, if I
21 discussed before, the term person could mean an individual or
22 go to the end here, there's over 9000 sections of this code.
22 corporation or trust, so it didn't give me really any idea as
23 Only about 1600 actually apply to what the IRS defines as the
23 to whether or not I was one of the persons that this section
24 individual income tax.
24 talked about. Again, it says any person liable for any tax
25 Q.
25 under this title. Well, this entire book is called the title.
Now, bearing in mind what you read a minute ago, the
Now, when I went to the section, I was expecting it to
516
515
There are sections and subsections, but this is the title. So
A.
2 what that 6001 said, any person liable for any one of the 85
2 Q.
3 taxes under here would be required to fill out the form.
3 attention to Section 6001?
4
MR. MURPHY: Your Honor, could we approach?
4 A.
5
THE COURT: You may.
5 in the 1040 form.
6
6 Q.
The privacy notice itself?
7 bench.)
7 A.
Right, the statement in the instructions 1040 booklet.
8
8 Q.
Okay.
9 objection. She is just rambling on and on and on.
9 A.
Yes.
10
MR. BECRAFT: I will ask questions.
10 Q.
Can I direct your attention to a document that you
11
MR. MURPHY: It is supposed to be questions and
11 should have up there that has a big 23 on it? I would like to
MR. MURPHY: Judge, I'm going to interpose an
Yes.
Can you identify what it was that directed your
Yes, it was the 1040 form, the Privacy Act information
12 answers.
12 identify it as being a 1975 document relating to your --
13
13 A.
Right in front of me, yes.
14 needs to proceed in accordance with 611.
14 Q.
Can you identify number 23 for us, please?
15
15 A.
Oh, yes, this was after I had read the Privacy Act, I
THE COURT: Objection sustained. The process
16 court.)
16 had -- actually, I had looked back at some other forms. I had
17 Q.
Ms. Kuglin?
17 found that I had a 1975 1040 form. The Privacy Act was passed
18 A.
Yes.
18 in 1974. I had been audited in 1975 and I had kept the
19 Q.
Let me ask a question and give us an answer, okay?
19 documentation for that. Inside of that form was also a
20 A.
All right.
20 Privacy Act notification, and this was the time that I had
21 Q.
Now -- you read the Internal Revenue Code, Section
21 initially read it when I was completing my 1040 form. At that
22 6001?
22 time in 1975, it really did not make sense to me, and it just
23 A.
Yes.
23 began making sense or becoming important in my thought process
24 Q.
And had directed your attention to that section,
24 after I had read some of the articles and the questions of the
25 correct?
25 6001 and the 6011 had come up.
518
517
Q.
That document that you have in front of you, it's your
sorry.
2 excerpts of official government documents?
2
THE COURT: Let me get the --
3 A.
Yes.
3
MR. MURPHY: Your Honor, if they want to put a
4 Q.
What you kept in reference to the 1975 1040 instruction
4 photocopy in of the front and the back --
5 booklet?
5
MR. BECRAFT: Excise --
6 A.
That's correct.
6
THE COURT: This is a 1975 return. How is this
7 Q.
And that's something you kept for your own personal
7 relevant?
8 business affairs, is that correct?
8
9 A.
9 this right here, this is a government document. I think
10
That's correct.
MR. BECRAFT: Your Honor, I would move for the
MR. BECRAFT: What's relevant, Your Honor, is
10 the government's objection is -- I didn't want to in
11 admission of the document that has a big 23 on it.
11 advance tear out those pages. I think those pages are
12
12 something that you can excise with ease.
THE COURT: Without objection, it will be
13 received as 36.
13
MR. MURPHY: Yeah, just make a photocopy.
14
MR. MURPHY: Judge, if we could approach.
14
MR. BECRAFT: I have got photocopies.
15
THE COURT: All right. Let me take a look at
15
THE COURT: You want me to take this page out?
16 the document.
16 I'm not sure -- it just comes out.
17
17
MR. BECRAFT: I'm satisfied.
18 bench.)
18
THE COURT: Okay.
19
19
MR. MURPHY: Judge, the only thing I object to,
20 the government language is fine, but her filling out the
20 court.)
21 tax return, I don't think that comes in.
21
22
22 is received as Exhibit 36.
MR. BECRAFT: I don't have any problem with
THE COURT: The government portion of the form
23 extracting it, Judge.
23
24
MR. MURPHY: You need to turn your mic off.
24 1975 1040 Instructions.)
25
MR. BECRAFT: I thought I had it off, I'm
25 Q.
Ms. Kuglin, do you need that document? Do you need --
520
519
A.
No, I don't.
2 Q.
All right. So after you compared the Privacy Act
A.
Well, in the Privacy Act notice it had -- it said --
2 had mentioned the word liable for the tax and that these were
3 notice that appeared in the 1975 1040 instruction booklet,
3 the -- 6001, 6011 were the regulations in which I could
4 what was your next step?
4 determine this.
5 A.
5 Q.
Well, the next step after I had read through the
Okay. Was it your understanding that being liable for
6 section on 6001, I still did not have a clear definition of
6 a tax had some relationship to being required to file a
7 whether or not I was a person that fit under this liability
7 return?
8 requirement for the tax imposed. The next section that was
8 A.
Absolutely.
9 referred to in the Privacy Act notice was Section 6011. So I
9 Q.
Okay. What did you believe about someone who was not
10 turned to 6011, and it says general requirement of return
10 liable for a tax?
11 statements or less. It goes on to say when required by
11 A.
12 regulation prescribed by the secretary, any person made liable
12 rules and regulations did not apply to them.
13 for any tax imposed by this title with respect -- or with
13 Q.
14 respect to the collection thereof shall make a return or
14 be in your view required to file a return?
15 statement according to the rules and regulations -- excuse me,
15 A.
No, he would not be.
16 according to the forms and regulations provided -- prescribed
16 Q.
Did you make any effort to determine other sections of
17 by the secretary.
17 the Internal Revenue Code and their relationship to the word
18
18 liable?
Well, now, this -- the first section has said that any
Well, if a person was not liable for the tax, then the
A person that would not be liable for a tax, would he
19 person liable, but it really didn't identify me as a person
19 A.
20 liable. The second section 6011 said any person made liable,
20 supposedly made me liable and that I could not find that it
21 but again we have got the words person, and for any tax under
21 had, I had, in going through my code, as most reference
22 this title, but it didn't identify how I was made liable for
22 documents are, there is an index in the beginning of the book,
23 the tax.
23 and so I thought, well, if I look under the terms income or
24 Q.
24 tax or liability, which was what I was looking for, that I
What was so important in your mind about being liable
25 for a tax?
I did. Since 6001 and 6011 were the sections that
25 would find perhaps some indicators where I could see how --
522
521
examples of this liability. So I found under this section
This was not confusing like the 6001 and 6011, it says the
2 of -- let me get it, liability, I found liability for tax.
2 distiller or importer shall be liable. Since it referred me
3 And the first entry --
3 back to 5001, I went to Section 5001, it says imposition, rate
4 Q.
4 and attachment of tax, rate of tax, in general. There is
Let me stop you right there. When you say you found
5 something, a liability for tax, can you put it into context,
5 hereby imposed on all distilled spirits produced in or
6 what are you reading from?
6 imported into the United States a tax at the rate of $13.50 on
7 A.
I'm reading from the index to the code.
7 each proof gallon and a proportionate tax at the like rate and
8 Q.
Okay.
8 on all fractional parts of a gallon. Now, that again was very
9 A.
I'm trying to find if there's a section in the code
9 clear to me, I knew exactly what they were talking about, who
10 that explains how a person is liable, how they're made liable,
10 they were talking about and what tax they were talking about.
11 since I didn't find it in the 6001, 6011 section.
11
12 Q.
When you turned to that index, what was your purpose?
12 in subtitle E of the tax code which is entitled Alcohol,
13 A.
My purpose was to find some words or some reference
13 Tobacco and Certain Excise Taxes, and as I went through the
I also found it interesting that this Section 5001 is
14 to -- in regard to liability, maybe I could find how a person
14 section a little bit more, it talks about tobacco taxes and
15 was made liable and who was made liable.
15 other types, and it's basically the same format. The
16 Q.
What did you do?
16 manufacturer, the wholesaler is made liable and -- for the tax
17 A.
Well, after I found this liability for tax, the first
17 imposed.
18 entry was alcohol taxes, and it said Section 5005 and 5041, so
18 Q.
What conclusions -- by engaging in this study of some
19 I turned to Section 5005, and Section 5005 entitled Persons
19 other tax, what conclusions did you draw?
20 Liable for Tax. Well, this, you know, seemed like I was in
20 A.
21 the right place, I was trying to find out if I was a person
21 arena -- and I found this in the arena of the excise tax, that
22 liable for the tax. And it says in general, the distiller or
22 it was very easy for the IRS to specify exactly who's liable,
23 importer of distilled spirits shall be liable for the taxes
23 what tax they're liable for, what the amount of tax is and
24 imposed thereon by Section 5001. Well, this was very clear to
24 there was no fussiness about it.
25 me, I thought, they know how to tell a person who is liable.
25 Q.
Well, I drew the conclusion that when -- in the
Did you study anything beyond what you just mentioned,
524
523
MR. BECRAFT: I'll do it, Your Honor.
the alcohol tax?
2 A.
I did, because the alcohol tax is not in subtitle A
2
THE COURT: I didn't say anything earlier to
3 and, of course, the tax that the IRS says that the 1040 form
3 the witness or the jury, but it's time that I told them
4 is applicable to is -- excuse me -- is the individual income
4 that we are required to follow question and answer format.
5 tax, which is in Section 1 of subtitle A. So I decided to
5
MR. BECRAFT: I will do it, Your Honor.
6 look through the index of the code, starting first with
6
THE COURT: Okay.
7 liability for tax, to see if there was any section that fell
7
8 under the first, say, 1600 sections of the code, which are
8 court.)
9 applicable to individual income tax, and as I'm going down
9
10 through the list, I see aviation, fuel tax, banking,
10 required to follow a question and answer format, and
11 employment taxes, highway motor occupational taxes, tobacco,
11 typically narrative testimony is not allowed. That
12 all these other taxes, and I get all the way down here right
12 doesn't mean that the person can't answer a question with
13 underneath wines, it has an entry, withholding tax, and I
13 a full sentence or maybe a paragraph, but it does have to
14 thought, well, I know that my employer is withholding money
14 follow a fairly short answer -- question and answer
15 out of my check, and right next to it I see Section 1461.
15 format. The reason for that is that under Rule 611 of the
16 1461 falls into the criteria of the sections of subtitle A --
16 Rules of Evidence, it's contemplated that we will use that
17
MR. MURPHY: Judge, can we approach?
17 format so that the opposing party can have an opportunity
18
THE COURT: You may.
18 to raise objections to improper questions or questions
19
19 that are not allowed by the rules and, frankly, so that
THE COURT: Ladies and gentlemen, we are
20 bench.)
20 all of us can more readily follow the testimony. It's
21
21 been found, typically, that the better format is a
22 rambling, narrative nature of this testimony, it's
22 question and answer format, so we have been discussing
23 improper.
23 that, and I thought by saying that and explaining a little
24
24 bit to the witness, because you wouldn't necessarily know
THE COURT: It's really -- we do have to follow
25 question and answer format.
25 that, that it would be helpful to all of us. So we have
526
525
to have a question followed by an answer that is
A.
I looked -- well, I checked to make sure that it was in
2 responsive to the question, and then the next question.
2 the first 1600 sections of the subtitle A, individual income
3 We're going to try to do that.
3 tax.
4
4 Q.
By chance, did you happen to turn to that section?
5
5 A.
Yes, I did.
6
THE WITNESS: I have been accused of the gift
6 Q.
After you turned to that section in the Internal
7 of gab.
7 Revenue Code, can you explain what you did?
8
8 A.
I read the section.
9 solve the question or problem by making it a little
9 Q.
And did you learn something from it?
10 briefer.
10 A.
Yes, I did. The section says every person required to
11
THE WITNESS: Okay.
11 deduct and withhold any tax under this chapter is hereby made
12
THE COURT: A little briefer.
12 liable for such tax.
13 Q.
THE COURT: Well, we're going to hopefully
Now, you were going through that index to the Internal
13 Q.
Now, did you do any -- once you read that code section,
14 Revenue Code looking for some other section that referenced
14 did you kind of look -- read anything else that related to it?
15 liability, a section that might fall within the range of the
15 A.
16 income tax sections of the code, is that correct?
16 liable for the tax was a person -- was somebody who was
17 A.
That's correct.
17 required to hold and -- deduct and withhold for that tax
18 Q.
Were you able to find such?
18 and --
19 A.
Yes, I did.
19 Q.
And did you make any effort to determine who that was?
20 Q.
Okay. After you found -- tell us what you found.
20 A.
Yes, I went on, and further on in the section, it talks
21 A.
I found 14 -- Section 1461, it says liability for tax
21 about the -- excuse me.
I -- I drew a conclusion that the person that was
22 withheld.
22 Q.
Let me -- did you study 1461, the code section that you
23 Q.
Now, you found that in the index?
23 just mentioned to determine who that party was that was
24 A.
Yes, I did.
24 liable?
25 Q.
Did you do something in response?
25 A.
Yes, I did.
528
527
Q.
Okay. And can you tell us what you learned?
2 A.
Yes, I learned that this 1461 is in the code section,
of taxes?
2 A.
That's correct, in alcohol, tobacco, excises and the
3 which is entitled withholding on foreign taxpayers, and the
3 other sections of the code, yes, but in this particular code,
4 beginning of the section, I turned to the beginning of the
4 in the first 1600 sections of the code, which is individual,
5 section, which is chapter 3, because -- and it says the
5 subtitle A, I found nothing else.
6 withholding tax on nonresident aliens and foreign
6 Q.
So what conclusions did you draw as a result?
7 corporations, so this led me to understand that Section 1461
7 A.
Well, the conclusion that seemed logical to me was, as
8 was applicable to the withholding agents of nonresident aliens
8 the tax code was saying, that the only person liable for the
9 and foreign corporations.
9 individual income tax under subtitle A was the withholding
10 Q.
10 agent for foreign -- I'm sorry, for nonresident aliens and
Now, this was one section that you had located inside
11 the Internal Revenue Code that related to the income tax,
11 foreign corporations, and my income as a pilot did not fall
12 correct?
12 under that category.
13 A.
That's correct.
13 Q.
Did you consider yourself a nonresident alien?
14 Q.
And it used the words in the statute itself liable,
14 A.
No, I didn't, I'm an American citizen.
15 correct?
15 Q.
Did you consider yourself a foreign corporation?
16 A.
That's correct.
16 A.
No, I didn't.
17 Q.
What, if any, effort did you make to determine whether
17 Q.
Were you making payments of income to nonresident
18 or not there were any other similar sections inside the
18 aliens or foreign corporations?
19 Internal Revenue Code in reference to the income tax?
19 A.
No, I was not.
20 A.
I --
20 Q.
All right. With that in mind, did you believe or have
21 Q.
Were there any others that you found?
21 any belief as to whether you were required to file a federal
22 A.
Yes, there were others that I found. There were -- as
22 income tax return?
23 far as a person made liable and liable for the tax, this
23 A.
24 Section 1461 was the only section under subtitle A.
24 saying that 6001 and 6011 were the regulations that required
25 Q.
25 me to complete the form, that I was not a person required to
Okay. So you found others in reference to other types
Well, this indicated to me based on the Privacy Act
530
529
file that form based on 1461.
what that was and what it required?
2 Q.
2 A.
Now, let me direct your attention to -- there should be
Again, went down to find the law, and read it and
3 a document in front of you that has a big 24 on it.
3 got -- made myself familiar with what the requirements of the
4 A.
Yes.
4 Paper Reduction Act was.
5 Q.
Do you have it in front of you?
5 Q.
Tell us what you learned as a consequence.
6 A.
I do.
6 A.
I learned that similar to the Privacy Act, Congress and
7 Q.
Okay. Is that a document that you obtained somewhere
7 agencies had been producing a lot of paperwork, a lot of forms
8 in this time frame between '93 and maybe late '95?
8 and people were getting confused as to which forms that were
9 A.
Yes, it is.
9 required. So by 1980 -- I believe it was 1980, the --
10 Q.
Is that something that you read?
10 Congress passed the Paperwork Reduction Act. What this act
11 A.
I did.
11 said was that every agency -- I need to back up about the law
12 Q.
Okay. Tell us what you gathered by reading that
12 a little bit, if I might.
13 particular document?
13 Q.
14 A.
14 you?
Well, by reading the document, it starts out with 26
Okay. What is it about the law that was important to
15 CFR 1.1-1, tax on individuals, and the discussion in the form
15 A.
16 is about something known as an OMB number and a cross
16 passes a law, the law is then given to the agency which is
17 reference.
17 responsible for developing the regulations to fit that law,
18 Q.
18 and those regulations have to be published in what is called
Okay. Did you engage in or make any effort -- you
The way the laws are promulgated, the -- Congress
19 mentioned this term OMB, what that might mean?
19 the Federal Registry, which is the citizens newspaper advising
20 A.
20 us of what the government is anticipating to do with us, and
Yes, I did. I did some research and found out that the
21 OMB numbers were numbers required on the forms and that the
21 once those -- the public has the ability to comment --
22 Congressional Act, the Paperwork Reduction Act was the
22
23 legislation which required these numbers to be put on forms.
23
THE COURT: You may.
24 Q.
24
You mentioned congressional legislation, the Paperwork
25 Reduction Act. What, if any, effort did you make to determine
25 bench.)
532
531
MR. MURPHY: Judge, I'm getting a little
lawyer attempts to tell you what the law is, you should
2 concerned that we're going beyond talking about her
2 not accept the law from them. It's my job to give you the
3 beliefs into what the law is, and I don't believe that's a
3 accurate statement of the law, and you should not be in
4 correct statement of the law.
4 any way confused about a statement that a lawyer or a
5
5 witness might make about the law.
MR. BECRAFT: I anticipated that in advance,
6 and I told the jury yesterday, correct me if I'm wrong,
6
THE WITNESS: Right.
7 but I think I brought that issue up when we were going
7
THE COURT: I know in this case we're going
8 through voir dire, but I know that I did it in my opening
8 into an inquiry as to what Ms. Kuglin's beliefs were, and
9 statement, and I know that I --
9 you're going to have to make some decisions about whether
10
10 or not they are good faith and there will be various
THE COURT: I think Mr. Murphy is right, we're
11 sort of trying to tell what the law is. I will just
11 criteria that you can use in making that determination.
12 remind the jury that at the end of the case, I will give
12 So a defendant is allowed to state what she believes the
13 the instructions as to the law, and whatever the witness
13 law was, obviously, and why she believed that, but her
14 or the lawyers say about the law is not the controlling
14 statement about what the law is not to be considered by
15 law in the case, that the law is what the court gives them
15 you as in any way reflecting what the law, in fact, is. I
16 as the law, and that may help us.
16 will give you those statements. We may need to remind you
17
17 of that a couple of times during the trial.
She can -- you can ask her what she believed
18 the law to be and why did she believe it, and the jury is
18
THE WITNESS: I apologize.
19 going to have to decide the ultimate question, but Mr.
19
THE COURT: Actually, we're going to take a
20 Murphy is correct on this.
20 short break and discuss what we talked about a little bit,
21
21 it might make us a little more efficient in the
22
22 presentation, and it's not inappropriate to make sure that
23 we know exactly how we're going to proceed. We're going
23 court.)
24
THE COURT: Ladies and gentlemen, it's a point
25 that we need to always keep in mind that if a witness or a
24 to take a 15-minute morning break. We didn't get a break
25 earlier. We actually started pretty early in here, and
534
533
Gentlemen, ladies, you may proceed.
I'm going to see some lawyers who have been waiting to see
2 me on a matter that was just brought to my attention just
2
3 about 30 minutes ago, and they have been waiting that
3 Q.
4 whole period of time, so we will take our morning break a
4 pull out the documents that have a big 26 and big 27 and big
5 little early. Remember, today is a day where we take a
5 28 and big 29 on them? Do you have those in front of you?
6 lunch break from about 12:30 to 2:00, and I think we're
6 A.
I have them in front of me.
7 going to finish all the proof probably today, it's hard to
7 Q.
The one that has the numbers -- well, how about also
8 be sure, but I think we will. Don't discuss the case
8 25, do you have that in front of you?
9 among yourselves. Don't let anybody talk with you. We
9 A.
I do now.
10 will see you in 15 minutes.
10 Q.
Okay. Now, can you describe the one that has the
11
(Jury out at 10:25 a.m.)
11 number 25 on it for me, please?
12
THE COURT: We will let y'all take your break
12 A.
Ms. Kuglin, let me give you a direction here, can you
Yes, this is entitled the Internal Revenue Cumulative
13 so everybody gets a restroom break.
13 Bulletin 1985-1 January through June.
14
(The court took up another matter.)
14 Q.
15
15 not that is a document that you read and relied upon at some
16
16 stage before, say, April the 15th of 1996?
17
17 A.
Yes, it is.
18
THE COURT: You can be seated. I think you can
18 Q.
Okay. How was your attention directed to that
Do you have a recollection or judgment as to whether or
19 all tell, I'm still trying to deal with insurance agents
19 document?
20 during the break. It doesn't go any better for me than
20 A.
21 you guys. I'm sorry it has taken a little bit more time,
21 Paper Reduction Act.
22 but I'm trying to deal with some problems that I need to
22 Q.
23 get taken care of too. Sorry. I found out also if I
23 description as to your understanding and belief about what the
24 tried to deal with them after 5:00 o'clock or before 8:30,
24 Paperwork Reduction Act was?
25 it doesn't work either.
25 A.
My attention was directed to this document through the
Did you have an understanding -- give us a brief
My brief understanding about the Paperwork Reduction
536
535
Act was that it was a legislative action by Congress in order
Q.
2 to get a handle on the number and amount of information
2 day that you had a '95 1040 instruction booklet there with
3 gathering forms that the agencies and the government were
3 you?
4 promulgating.
4 A.
Yes, I do.
5 Q.
5 Q.
Can I ask this simple question? Did you make an
Okay. And did you have any understanding as to whether
Now, do you have -- I think I noticed earlier in the
6 or not there was some type of a requirement imposed on
6 inquiry back when you were studying this Paperwork Reduction
7 government agencies in reference to this paperwork and OMB
7 Act as to what OMB control number appeared on the Form 1040?
8 numbers?
8 A.
Yes, I did.
9 A.
9 Q.
Okay. Do you have that in front of you?
10 could be enforced, before an information gathering document
10 A.
Yes, I do.
11 could be authorized, both the regulation and the document had
11 Q.
Do you have a Form 1040 in front of you?
12 to be submitted to the office of management and budget for
12 A.
Yes, I do.
13 approval.
13 Q.
Did you make such an examination back whenever you were
14 Q.
14 doing this in '93, '94, '95 as to what OMB control number
My understanding is that when -- before a regulation
And what was your understanding about how something was
15 approved by office management and budget?
15 appeared on the Form 1040?
16 A.
16 A.
Yes, I did.
17 approved was that the office of management and budget,
17 Q.
What did you learn?
18 otherwise known as the OMB for short would read the
18 A.
I learned that the OMB number on the Form 1040 is OMB
19 regulation, determine that it was a valid regulation, they
19 number 1545-0074.
20 would then review the information gathering form which was
20 Q.
21 attached to that regulation or form, and once they had
21 has a big 25 on it.
22 determined that both the regulation and the form were
22 A.
I have got that.
23 appropriate that they would affix an OMB number to that form,
23 Q.
Okay. Tell us what you did once you obtained that
24 and that the OMB number on that form could only -- that form
24 document, Exhibit Number 24 or big 25?
25 could not be cross referenced to another regulation.
25 A.
My understanding about how these documents were
Now, let me direct your attention to the exhibit that
I knew through the Paperwork Reduction Act that every
538
537
agency was required to publish a cross reference or an index,
Make sure I have got them all. I don't think so. I have
2 cross referencing the regulations with the approved
2 got 26 and I have got 27.
3 information gathering forms.
3
4 Q.
Now, briefly identify 26 and 27 for us, please.
4 have.
5 A.
26 and 27 is entitled 1993 instructions for form 2555.
5
6 Q.
And 27 is?
6 looking for. All right. There we go.
7 A.
27 is form 2555.
7
MR. BECRAFT: 26 will have 38, Your Honor.
8 Q.
All right. Are these documents that you read and
8
THE COURT: I have got it now. Thanks so much.
THE WITNESS: Oh, I'm sorry, 25 is the one I
THE COURT: Yes, ma'am, that's what we're
9 relied upon, say, sometime prior to April 15th of '96?
9 And I will hand it back in just a second, let me make a
10 A.
10 notation.
11
Yes, they are.
MR. BECRAFT: Your Honor, could I move for the
11
12 admission of those next three?
12 IRS Bulletin.)
13
MR. MURPHY: No objection.
13
14
THE COURT: Yes. They're received as 37, 38
14 1993 Form 2555 Instructions.)
15 and 39.
15
16
16 1993 Form 2555.)
THE COURT: Can I ask you a simple question?
17 Wait just one second. We keep a running list, ladies and
17
18 gentlemen, and if the deputy is not here, I maintain a
18
19 duplicate list, that's why we have to do that, and
19
20 sometimes folks don't know that I have to do that.
20
21
21 Q.
MR. BECRAFT: Your Honor, I wrote down a note,
Now, Ms. Kuglin, you have in front of you Exhibits 37,
22 the one that says 25, put 37 on it.
22 38 and 39, correct?
23
THE COURT: Oh, okay. Let me see 25.
23
24
THE WITNESS: Did I not pass them to you?
24 Q.
Can we proceed without that?
25
THE COURT: No, ma'am, that's why I do that.
25 A.
Yes, we can.
THE COURT: I have still got 38 and 39.
540
539
MR. BECRAFT: If the court doesn't mind.
2
THE COURT: No, that's fine.
Q.
So you picked up both the form itself as well as the
2 instructions?
3 A.
Right. It may have been the Post Office.
4 15th of 1996, and you looked at them and studied them, what
4 Q.
Okay.
5 was it that you concluded by your examination of them?
5 A.
But I acquired the Form 2555.
6 A.
6 Q.
So tell us what that meant to you in reference to some
3 Q.
These three documents you acquired before April the
I looked at the cross reference, the cumulative
7 bulletin, and it lists the 26 CFR part of the section and then
7 obligation on your part to Form 1040?
8 the current OMB number for the form applicable to that, and
8 A.
9 the first entry on that index is 1.1-1, which I was familiar
9 the Paperwork Reduction Act for the agencies to give us an
10 with, was the individual income tax, and I looked to the
10 idea of what forms are approved for specific regulations, that
11 right, and the form -- the number -- the OMB control number
11 listed here the only form that is listed for 1.1-1, individual
12 for the form applicable to that is 1545-0067.
12 income tax, is the 0067 form, that that was the form that I
13 Q.
13 would be responsible for completing.
Now, did you have some mental operation at the time as
Well, since this was a document that was required by
14 to whether or not that was the form that related to the Form
14 Q.
Let me -- can you pull out from the exhibits the
15 1040?
15 document that has a big 28 on it?
16 A.
Well, the Form 1040 has an OMB number of 1545-0074.
16 A.
I have that document.
17 Q.
And this one had a different number?
17 Q.
All right. Somewhere around the time frame in which
18 A.
Yes, it does. The last four numbers are 0067.
18 you were examining or studying the prior three exhibits, did
19 Q.
Okay. Did you make any effort to determine what form
19 you obtain that document?
20 it was that that related to?
20 A.
Yes, I did.
21 A.
21 Q.
Okay. Can you tell us what it is?
22 whether or not or how I could find out what form that was. I
22 A.
It's entitled TD, which is my understanding treasury
23 may have called the IRS, as far as how to find out the form
23 decision. Treasury decision under Internal Revenue laws of
24 number, and then they told me that it was Form 2555, and I
24 the United States, volume 18, January to December, 1916.
25 went down to the IRS office and picked one up.
25 Q.
Yes, I did. I went down to the IRS, and I asked them
And is the document that you have in front of you
542
541
Treasury Decision 2313?
I would sometimes go just to read through and get familiar
2 A.
Yes, it is.
2 with some of the older tax laws and such like that.
3 Q.
Let me kind of back up, and I want to ask a broad
3 Q.
All right. What law library did you visit?
4 question about what you have done to locate documents and
4 A.
The University of Memphis has a very good law library.
5 cases. Before you made these studies of the tax laws, had you
5 Q.
There on Central?
6 ever even gone to a law library before?
6 A.
Yes, sir.
7 A.
7 Q.
Have you also attended meetings where you have gathered
Not before I started my study, no, I had never walked
8 into one.
8 some of these same type of documents that was available?
9 Q.
9 A.
Yes, I did.
10 before '92?
10 Q.
And did you obtain documents from the Internal Revenue
11 A.
No, I had not.
11 Service itself?
12 Q.
Since then, between 1992, the time that you heard Andre
12 A.
Had you ever even really studied any law whatsoever
I obtained like a 2555 from either the Internal Revenue
13 Maru (spelled phonetically) on TV and, say, like all the way
13 Service or the Post Office, somebody who had the forms
14 up through April 15th of 1996, you started studying the law,
14 available.
15 what you perceived and understood to be the law --
15 Q.
16
16 you had done what you just described, visited the library,
THE COURT: We have an equipment failure, wait
Now, by the time that you're looking at this Form 2555,
17 just a second.
17 read a whole lot of material, obtained it from various
18
18 sources, including the government and the IRS and the law
THE REPORTER: Could you repeat the last
19 question?
19 library, correct?
20 Q.
Had you gone to a law library before '92?
20 A.
That's correct.
21 A.
No, I had not.
21 Q.
You had certain beliefs at that stage as to whether or
22 Q.
Did you go to the law library after '92?
22 not you were required to file an income tax return, is that
23 A.
Yes, I did.
23 correct?
24 Q.
How frequently?
24 A.
25 A.
I went each time I needed to find a copy of a case, and
25 whether or not the 1040 was the appropriate form.
That was correct. I was beginning to really question
544
543
Q.
All right. And once you made this comparison, you had
A.
Yes, I did.
2 Exhibit Number 37 in your hand which listed some OMB control
2 Q.
3 numbers and you had Exhibit Number 26 and 27 in your hand,
3 whether or not you were required to file an income tax return?
4 what conclusions did you draw?
4 A.
5 A.
5
Well, I drawed -- I drew the conclusion, after seeing
And it related to your formation of your beliefs about
That's correct.
6 Form 2555 which had the OMB control number 0067, which the
6 admission of the document that has the big 28 on it.
7 cross reference said was the appropriate information gathering
7
8 form for the individual income tax, 2555, and the heading of
8
9 that form is -- excuse me -- the title on that form is foreign
9
10 earned income.
10 1916 Treasury Decision.)
11 Q.
11 Q.
Tell what it was you learned by reading that?
12 A.
Well, this was in regard to the taxation of nonresident
Now, looking at the one that has Exhibit Number 28 on
12 it.
13 A.
You'll have to tell me which form, since they have
13 aliens and foreign corporations.
14 changed the --
14 Q.
Do you need the document back?
15 Q.
No, this one --
15 A.
That would probably be helpful.
16 A.
-- the numbers.
16 Q.
Look at that document and give us the refined essence
17 Q.
This one should only have 28 on it.
17 of what you learned from it?
18 A.
I have got that. Treasury Decision 2313.
18 A.
19 Q.
Right. Now, were you obtaining documents like that
19 which it says that they hereby held that the income accruing
Well, initially, it talks about the Brushaber case in
20 from a wide variety of sources?
20 to nonresident aliens in the form of interest and from bonds
21 A.
Yes.
21 and dividends of the stock of domestic corporations is subject
22 Q.
Did you obtain that before -- sometime before April
22 to the income tax imposed by the Act of October 13, 1913. In
23 15th of 1996?
23 other words, the 16th Amendment.
24 A.
Yes, I did.
24 Q.
25 Q.
Okay. Is that something you read and relied upon?
25 of Form 1040?
Is there anything in there that relates to the filing
546
545
A.
Let me read on. There is one mention of a form, and it
1040, and I missed that as I was reading it.
2 says that -- it's at the end of quite a long paragraph, so I
2 Q.
Okay.
3 will just summarize the paragraph, it talks about nonresident
3 A.
My other form was highlighted.
4 aliens and such, and it says that sum will be sufficient to
4 Q.
Let me ask you this question: What was going through
5 pay the normal tax of one percent imposed by law and shall be
5 your mind at this stage about whether or not you were required
6 made on an annual return of 1042. There is another form, form
6 to file a Form 1040?
7 1008 for deductions applicable to nonresident aliens and other
7 A.
8 agents and representatives.
8 were government documents and the cross reference, which is
9 Q.
9 required by every agency to be completed, indicated to me that
Did you reach any conclusion as to whether or not what
Well, the documents that I had in front of me, which
10 they were talking about in that treasury decision had any
10 the only form that had been approved by the office of
11 application to you?
11 management and budget for the individual income tax was the
12 A.
12 form 1545-0067, entitled foreign earned income. It confirmed
I did not. There's another mention of a form on the
13 third page.
13 for me what I had found in the tax code under 1461. The only
14 Q.
Let me direct your attention --
14 section under subtitle A, individual income tax, which makes
15 A.
Yes.
15 any person liable for the tax on subtitle A, which is
16 Q.
There's a page that has 53 at the top.
16 nonresident alien -- I'm sorry, the withholding agent for
17 A.
Yes.
17 nonresident aliens and foreign corporations, and I realized
18 Q.
Okay. And then using that page at the very bottom
18 that I did not fit in either one of those categories and,
19 going over to page 54.
19 therefore, that Form 2555 was not applicable to me.
20 A.
Yes.
20 Q.
21 Q.
Is that a section that you read and relied upon?
21 direct your attention to Exhibit Number 41, if I may. Big
22 A.
Yes. The responsible heads, agents or representatives
22 thick one.
Now, let me -- you did some other studies, and let me
23 of nonresident aliens who are in charge of the property owned
23 A.
Yes.
24 or business carried on within the United States shall make
24 Q.
Is that something that you read, studied and relied
25 full and complete return of the income tax form on the Form
25 upon?
548
547
A.
Absolutely. That was a long read.
2 Q.
Okay. Just tell us what you learned by reading that
jurisdiction over some of that land.
2 Q.
Now, was this -- is this an official government
3 document.
3 document to your understanding?
4 A.
4 A.
To my understanding, it is.
5 Areas Within the United States, a report of the
5 Q.
Did what you read -- what you read in that work, did it
6 interdepartmental committee for the study of jurisdiction over
6 have an impact on your beliefs regarding your requirement to
7 federal areas within the states. This was submitted to the
7 file Form 1040?
8 attorney general and transmitted to the president on June of
8 A.
Yes, it did because -- yes, it did.
9 1957. President Eisenhower was interested in finding out what
9 Q.
Okay. What was it?
10 the jurisdictional limitations of the federal government was,
10 A.
Well, it said to me that because the federal government
11 and he asked the state's attorney general to compile a
11 had not acquired jurisdiction over where I lived, the area
12 document.
12 that I lived or over the place that I worked, employment, that
13 Q.
13 this was not subject -- that I was not subject -- a person
This document is entitled Jurisdiction Over Federal
Can you give us the refined essence of what it was that
14 you learned by reading that document?
14 subject to that jurisdiction in regards to the income tax, and
15 A.
Yes, I found out that federal jurisdiction extended
15 with all of the other -- substantiated the other court cases
16 into the state territories in one of three ways they could
16 and things that I had read. Also, I looked in the index to
17 have acquired that. One of the ways was that land within the
17 find out what the jurisdiction of the federal government in
18 states could be sold to the federal government and, therefore,
18 the realm of income tax was, and the only thing I could find
19 they would acquire jurisdiction over that, that land could be
19 in the index was in reference to the state's ability to tax
20 ceded by the legislature under certain prescribed methods to
20 people that were on federal land. There was no reference
21 the federal government for its military grounds, other
21 whatsoever of the ability of the federal government to
22 facilities, and that federal jurisdiction applied to those
22 directly tax property that I owned.
23 areas. And that the third way that the government could
23 Q.
24 receive federal jurisdiction within the states was when a
24
25 territory became a state, the government could retain
25
THE COURT: You may.
Now --
550
549
THE COURT: We have to let Mrs. Parker have a
2 bench.)
2 chance to replug her equipment in.
3
3
MR. MURPHY: Judge, I'm going to object. We're
MR. BECRAFT: May I approach the witness with a
4 getting back into the long narrative.
4 couple of exhibits, Your Honor?
5
5
MR. BECRAFT: If I can tell the court, I'm
THE COURT: You may.
6 through offering exhibits. I am at the stage now where
6 Q.
7 we're getting ready to go into the long stretch, what she
7 don't know the exhibit number for it, but the '92 return, is
8 did with the IRS, letters you wrote, those Don Roberts'
8 that correct?
9 letter and we're wrapping up.
9 A.
That is correct.
10
10 Q.
And that was prepared by an accountant, is that
MR. MURPHY: I'm going to object to any mention
Ms. Kuglin, there has been offered into evidence, I
11 of the Roberts' letters at all.
11 correct?
12
12 A.
That's correct.
13 were no opinions which she relied, so they're just
13 Q.
Mr. Napp?
14 hearsay.
14 A.
Yes, sir.
15
MR. BECRAFT: Okay. Just to tell the court
15 Q.
Did you file a '93 return?
16 where I'm headed, we have concluded all her beliefs.
16 A.
No, I did not.
17
17 Q.
And at the time that you -- where were you living then,
THE COURT: There's no indication that there
THE COURT: Are we going to finish before
18 in '93?
18 lunch?
19 A.
I was living where I am now, 200 Wagner Place.
20 me and then it depends on Mr. Murphy.
20 Q.
Shelby County, Tennessee?
21
21 A.
Yes, sir.
22
22 Q.
Downtown Memphis?
23 A.
Yes.
24 Q.
And where did you work?
25 A.
I worked at Federal Express.
19
MR. BECRAFT: I'm hoping maybe 15 minutes for
23 court.)
24
MR. BECRAFT: Before I proceed, can I get an
25 exhibit?
552
551
Q.
Out at the airport?
Q.
You don't have any contentions, whatever those
2 A.
That's correct.
2 figures --
3 Q.
Also in Shelby County?
3 A.
Yeah.
4 A.
Yes.
4 Q.
-- they're correct?
5 Q.
And I think we got evidence here that -- you were
5 A.
That's correct.
6 either sent checks from or there was an account that you had
6 Q.
7 at the Credit Union where FedEx just deposited your paycheck
7 A.
No, I did not.
8 into the account?
8 Q.
9 A.
Yes.
9 A.
No, I did not.
10 Q.
Did that happen from '92, '93, forward?
10 Q.
Were you subjected to withholding in '95?
11 A.
I believe that that is the case. I'm not quite sure
11 A.
Yes, I was.
12 when I set up automatic deductions. I was flying
12 Q.
So what did you do ultimately regarding this problem of
13 international at that time, and it was convenient.
13 withholding from your pay?
14 Q.
14 A.
Now, there's a '90 Form W-4 that's submitted into
Ultimately, by December 30th of 1995, I come to the
15 evidence, and do you recall that it says, you know, you're
15 conclusion that there was -- I had found significant enough
16 taking your normal exemptions?
16 information to really question the fact that I was required to
17 A.
Correct.
17 file the Form 1040, the question that whether or not it was an
18 Q.
Now, we don't have anything here for '93, '94, but were
18 appropriate document and a required document.
19 you subjected to withholding in '93 and '94?
19 Q.
Okay. Now, let me direct your attention to -- can you
20 A.
Yes.
20 take a look at those exhibits in front of you and pull out 47,
21 Q.
And do you have a judgment or recollection as to
21 the one that has 47 on it and the one that has 48?
22 approximately what the rate of withholding was for you during
22 A.
Can you tell me the name of -- in this pile?
23 '93 and '94?
23 Q.
I believe so.
24 A.
24 A.
The ones that you just gave me?
25 Q.
No, not the ones that I just gave to you. In the stack
I'm not sure of the total amounts, I believe it was
25 specified yesterday it was about in the 30 or $40,000 ranges.
554
553
that you had when you began your testimony this morning.
2 A.
All right.
2 court.)
3 Q.
I believe they're your letters bearing your signature
3 Q.
Just to make a point -- just to make a point, did you
4 in October of '95 and November of '95. Do you have them?
4 have some type of actual sit down face-to-face meeting, not in
5 A.
I have these letters.
5 reference to yourself, but in reference to someone else, in
6 Q.
Before we get into the substance of that, did you have
6 reference -- with some IRS agents in the summer of '95?
7 any conversations with anybody at the IRS sometime in 1995
7 A.
That's correct, yes, I did.
8 that related to your investigations of the tax laws?
8 Q.
Let's not get into the substance of that, okay. Now,
9 A.
9 what was your -- what was going through your mind at that
Yes, I did. I had an acquaintance --
10
10 stage after that meeting?
11
THE COURT: You may.
11 A.
12
12 on the meeting was that contrary to the information on the
I had -- the thing that was going through my mind based
13 bench.)
13 documents which said that I could go to the IRS and ask the
14
14 questions that I had in regard to my liability under the
MR. MURPHY: Judge, I don't know that her
15 conversations with the IRS are relevant. It's hearsay.
15 individual income tax --
16
16
17 I'm not going to -- I'm going to expressly disinvite her
17
18 to relating what they said, Your Honor, and mention that
18
19 she had a meeting in July, that she reached certain
19 court.)
20 conclusions. They have an effect upon the other reasons
20
21 why she wrote those letters in October and November.
21 relevance. What does this have to do with her belief?
22 Although we do have a date of the meeting with the IRS,
22
23 not that I'm going to offer it, Your Honor. I just
23 I'm getting ready to offer those two letters, October and
24 mention that in passing.
24 November of '95 that she wrote to the Internal Revenue
25
25 Service, Your Honor.
MR. BECRAFT: I was merely pinpointing a time.
THE COURT: Okay.
MR. BECRAFT: Her intent and belief led her --
556
555
THE COURT: Do you have any objection?
2
MR. MURPHY: I don't have any objection to the
Q.
What with the other one?
2 A.
The other one was addressed to the Internal Revenue
3 letters, Judge.
3 Service in Memphis, attention of James Gaither, chief
4
4 collection branch.
MR. BECRAFT: I will speed it up, I'll move to
5 Q.
5 the --
All right. Did you sign those letters and mail them to
6
THE COURT: Move to the letters. Good.
6 the IRS?
7
MR. BECRAFT: Thank you.
7 A.
Yes, I did, and I have certified copies of the receipt.
8
8 Q.
So you sent them certified to the IRS?
9 court.)
9 A.
Yes, I did.
10 Q.
10
Ms. Kuglin, let me direct your attention, let's just go
11 to the heart of the matter, to the letter that, I believe you
11 admission of the documents that have 47 and 48 on it.
12 wrote in October of '95. It has a big 47 on it.
12
13 A.
I have got that letter.
13 on, I believe it's 48 that I'm taking the position that
14 Q.
Okay. Now, does it have a date on it?
14 aren't admissible.
15 A.
Yes, it does. It is October the 18th, 1995.
15
16 Q.
All right. And take a look at the next one.
16 will go over them at side bar.
17 A.
That one is dated November 25th of 1995.
17
18 Q.
All right. Are those letters that you composed?
18 bench.)
19 A.
Yes, they are.
19
20 Q.
All right. Do they relate to your tax liens or tax
20 an attachment, I don't know if it is from the IRS, it says
MR. MURPHY: Judge, there's some attachments
THE COURT: Let me take a look at them and we
MR. MURPHY: Judge, I believe it's 48, there's
21 positions?
21 someone is not liable to file a tax return. The names are
22 A.
They relate to the questions that I wanted to ask, yes.
22 blacked out. Judge, I don't think that ought to come in.
23 Q.
Okay. And to whom are they addressed?
23 There's two of them.
24 A.
They were addressed -- the October the 18th letter was
24
THE COURT: Let's make sure we're --
25
MR. BECRAFT: Of course -- yeah, those are it.
25 addressed to the Internal Revenue Service, Memphis, Tennessee.
558
557
THE COURT: These are letters which are from --
November 25th, 1995 letter with certain attachments, and
2 of an individual in Delano, California, that the name is
2 it's addressed to Internal Revenue Service to Mr. Gaither
3 blacked out, the taxpayer's name is blacked out, and the
3 from Ms. Kuglin.
4 taxpayer in Ogden, Utah, and the name is also blacked out
4
5 on that, so these are hearsay documents, and they're
5 October 18, 1995 Letter.)
6 not --
6
7
MR. BECRAFT: I would redact them, Your Honor.
7 November 25, 1995 Letter.)
8
THE COURT: Subject to any --
8 Q.
9
MR. MURPHY: Judge, I don't have a problem with
9 time, what did you believe about the necessity on your part to
Ms. Kuglin, what was going through your mind at that
10 the exhibit.
10 file Forms 1040?
11
MR. BECRAFT: Can I tear them?
11 A.
12
THE COURT: Let's see if we can't find a staple
12 government documents that I relied upon, the 1040 was not the
At that time, based on my research, based on the
13 remover.
13 form that I had -- excuse me, let me start this again. I come
14
14 to the conclusion or the belief that there was no regulation
MR. BECRAFT: I will pull those apart without
15 those pages.
15 in the Internal Revenue Code that made me liable for the
16
THE COURT: Sure.
16 individual income tax and that the 1040 form, there was no law
17
MR. BECRAFT: And I see a stapler right there.
17 that required me to file that form for that particular tax.
18 I will pull out those two appending documents, and now we
18 Q.
Looking at Exhibit Number 41, did you pose certain
19 can staple it back.
19 questions in the letter?
20
THE COURT: Okay. All right, gentlemen.
20 A.
This is the new 41 we're talking about?
21
21 Q.
Yes. It will have a yellow sticker on it that says 41
22 now.
22 court.)
23 A.
And would you repeat your question?
24 42. 41 is an October 18, 1995 letter to the Internal
24 Q.
Did you pose by means of that letter certain questions?
25 Revenue Service from Ms. Kuglin, and Exhibit 42 is a
25 A.
Yes, I did.
23
THE COURT: We will mark Exhibit 41 and Exhibit
560
559
Q.
THE COURT: Yes, you may.
What were the questions that you posed to the Internal
2 Revenue Service?
2 Q.
Can you hand me the next exhibit, November?
3 A.
The initial question was in regard to the OMB cross
3 A.
Yes.
4 reference number and the fact that the 1040 form had the
4 Q.
Now, I have on the Elmo here your letter dated November
5 1545-0074 number on it, and the cumulative bulletin index
5 the 25th of 1995.
6 showed that the only form that had been approved for the
6 A.
Yes.
7 individual income tax was the 2555 form, foreign earned
7 Q.
Sent to the Internal Revenue Service. Was there
8 income. I listed a court case that said for federal tax
8 something that prompted this?
9 purposes, federal regulations govern, and I discussed my
9 A.
10 understanding of the requirement of the statutes and
10 received a CP 515, 516, 517 and 518 letters which were
11 implementing regulations in regard to determining liability
11 requests for a 1040 form to be filed.
12 for any individual in regard to the taxes.
12 Q.
13 Q.
13 this letter. You sent it certified, right?
Now, sometime later -- let me ask you this question:
I did not get a response for my first letter, and I had
Now, let me direct your attention to the second page of
14 Were the questions that you posed in that letter, were they
14 A.
That's correct.
15 answered by the IRS?
15 Q.
And you got the certified return receipt here?
16 A.
16 A.
Yes.
17 that letter, I did make a note that if I did not receive
17 Q.
Now, the second page of this letter that I have got on
18 answers to the above requested information within ten days of
18 the screen, it's kind of light, but is this the series of
19 certified receipt date, it will indicate to me that even in
19 questions that you were posing at that time to this addressee
20 absence of receipt of a Form 2358C, which is a form that says
20 of this letter, Mr. Gaither?
21 I'm not required to file, that you, the IRS, are in agreement
21 A.
Yes, they are.
22 with my assessment that there is not a requirement for me to
22 Q.
Okay. Describe those questions for us.
23 return to you a completed Form 1040.
23 A.
Well, my monitor is a little blurry.
24
24
No, they were not. And I, in the last paragraph of
25 Honor?
THE COURT: You can focus it and make it a
25 little larger.
562
561
A.
That's fine. The first question that I posed --
mind about the importance of being told about what statute
2 actually, I said, therefore, if you feel I have been
2 makes you liable for the federal income tax?
3 misinformed regarding the above information, please provide me
3 A.
4 with the following or give me an appointment with someone who
4 said that those -- the 6001, 6011 were the regulations under
5 can. And this was based on Internal Revenue Code 6110. The
5 which I was required to file the 1040 form. And in my
6 first question that I asked them to address was the statute
6 research, I had determined that that form was not applicable
7 asking them for the statutes and implementing regulations
7 to the individual income tax based on the cumulative bulletin
8 which required that I file a tax return. Two, I wanted the
8 index and that the form 2555 entitled foreign and earned
9 statutes and implementing regulations which specifically
9 income did not apply to me, and I was wanting the IRS to clear
10 designate the exact tax for which I am liable for on the 1040
10 up this confusion for me.
11 form. Third question, the statutes and implementing
11 Q.
12 regulations which authorizes the IRS to enforce number one,
12 with you?
13 the statutes and implementing regulations which authorizes the
13 A.
No, they did not.
14 IRS to compute taxes, penalty and interest based on income
14 Q.
Nobody called you and said, Ms. Kuglin, here is the
15 reported to you by any employer -- I'm sorry, my employer,
15 answer to your questions?
16 banks, et cetera, as shown on page five of your letter. And
16 A.
No, they did not.
17 five, in lieu of one through four above, a letter 2358C
17 Q.
Okay. Let's say by December 30 -- well, Christmas of
18 determination letter stating to me that I am no longer
18 '95, what did you think -- what went through your mind, here
19 required to file a tax return. I am receiving -- let's see, I
19 you have sent two letters to the IRS asking them questions and
20 am reserving all of my rights in this matter. Respectfully
20 nothing has happened?
21 awaiting your reply, Vernice Braendli Kuglin.
21 A.
22 Q.
Did you receive any reply to this letter?
22 I had asked the question what regulation -- excuse me, what
23 A.
No, sir, I did not. Not to the questions on this
23 implementing regulation made me liable for the individual
Well, under the Privacy Act, the 1040 form said, it
And nobody from the IRS ever scheduled an appointment
Well, by December of 1995, as a result of the fact that
24 letter.
24 income tax and what law required me to file Form 1040, I had
25 Q.
25 asked this question through letters, I had asked it personally
What was so important -- what was going through your
564
563
to IRS agents, and I got no response, so it was indicative to
got there, I realized -- I was actually told how to file this
2 me or I came to the conclusion that since they had not
2 form, and I filed an exempt W-4 form.
3 responded to me in regards to that question, that my research
3 Q.
4 and my data was accurate, and I made the decision at that
4 substance of that -- let me withdraw that and ask you to
5 point in time to stop my withholding.
5 summarize the position that you take in reference to that
6 Q.
6 exempt W-4 form dated December the 30th, 1995?
Did you have a willingness, if answers had been
I think the jury has, without getting into the
7 obtained by you to your questions, did you have a willingness
7 A.
8 to go ahead and file returns and pay the taxes?
8 exemption from withholding for 199 -- this said 1995, and I
9 A.
9 certify that I meet both the following conditions for
Absolutely. And even later on when I hired an
On the W-4 form, it says in number seven, I claim
10 attorney, which I was told to do by the IRS agents, to write
10 exemption: One, last year I had a right to a refund of all
11 my letters for me, I thought that perhaps if they were
11 federal income tax withheld, because I had no tax liability;
12 ignoring my own letters that they would not ignore the letters
12 and, two, this year, I expect a refund of all federal income
13 of an attorney, that I asked them to ask the same questions.
13 tax withheld, because I expect to have no tax liability. In
14 Q.
14 view of the fact that I had determined, based on all the
Okay. Now, you filed December 31st, 1995 for the first
15 time an exempt W-4 form, correct?
15 documentation that I received, that I was not a person who had
16 A.
Yes, I did.
16 been not -- that had not been made liable in Section 6001 and
17 Q.
Do you have that in front of you?
17 6011, that for the individual income tax that I qualified for
18 A.
Yes, I do.
18 this as a person who had no liability.
19 Q.
Okay. Can you explain that to us, what you did?
19 Q.
20 A.
Yes, this is a Form W-4, 1990 -- it is actually dated
20 out and look at them, but do you recall, we have got in
Let me ask you -- I don't think we need to pull them
21 1995. By December the 30th, 1995, I had made a decision that
21 evidence here the other subsequent Forms W-4 that you
22 I would stop my withholding until such time that I got an
22 submitted to FedEx.
23 answer to my two questions from the IRS. I went into my
23 A.
Yes.
24 employer, FedEx, anticipating that I might have a little
24 Q.
Okay. Is it your recollection that they say exempt on
25 difficulty persuading them to accept my W-4 form, but when I
25 them as well?
566
565
A.
That is correct.
2 Q.
Let me ask you some questions about that group. You
Q.
Let me withdraw these questions. Are you cognizant of
2 the fact that you claimed exempt on those forms?
3 claimed exempt on all those later forms for a specific reason?
3 A.
Yes, I am.
4 A.
Yes, I did.
4 Q.
Let me ask the questions that don't relate to having
5 Q.
Can you tell the jury what that specific reason was?
5 the documents in front of you. Can you tell the jury why you
6 A.
Okay. Can you go over the years that we're talking
6 did so?
7 about?
7 A.
8 Q.
8 questions, via letters and visits to the IRS, for the
Okay. You know, it's my recollection there's '97, '98,
I claimed that exemption because I had been asking
9 '99 forms exempt W-4 --
9 implementing regulation that made me liable for the individual
10 A.
10 income tax and the law that required me to file a 1040 form.
Oh, yes, yes.
11
MR. MURPHY: I'm going to object. I think a
11 I had not gotten responses to those letters, and based on all
12 better way to do it would be to show her the exhibits.
12 of my research and study, understanding from the court cases,
13
13 especially Jack Cole versus McFarland that my right to earn a
THE WITNESS: I'm familiar with what he's
14 talking about.
14 living was a right of common occupation and, therefore, could
15
15 not be taxed under the individual income tax.
THE COURT: Mr. Murphy is right, though, mainly
16 because you can't ask the lawyer a fact question.
16 Q.
Let me ask a couple of final questions, if I may, Ms.
17
THE WITNESS: Okay.
17 Kuglin. You agree that for '96, '97, '98, '99, 2000, 2001,
18
THE COURT: That is why they usually pass it
18 you didn't send in 1040 forms to the IRS, right?
19 up. Why don't you pass it up, make sure that we have got
19 A.
That's correct.
20 the document?
20 Q.
On April 15th, after all those years, all the way up
21
21 through April 15th of 2002, did you have a belief that you
MR. BECRAFT: Judge, I don't know if I have the
22 numbers real handy.
22 were required by law to file those forms? Did you have a
23 Q.
23 belief that you were required to file the forms?
Oh, wait, I think I gave them to you. Do you see one
24 later?
24 A.
What were the dates that you just gave me?
25 A.
25 Q.
For all the years covered in the indictment, '96
Oh, yes, I do. Well, no, I have got a copy.
568
567
through 2001, I think April 15th, after every year.
I filed exempt.
2 A.
2 Q.
No, I was not under the belief that I was required to
Ms. Kuglin, from 1993 all the way up through April of
3 file the Form 1040 form.
3 2002, did you engage in tax evasion?
4 Q.
4 A.
Okay. In reference to filing, give us what your belief
I did not. I always offered to pay my taxes that I was
5 was, very specifically.
5 liable for.
6 A.
6
MR. BECRAFT: One moment, Your Honor, if I may.
7 regulations had made liable for the individual income tax and
7
8 that there was no law requiring me to file the 1040 form.
8
9 Q.
9
10 you submitted, starting also with the one dated December of
10
MR. MURPHY: If I can have a minute to get my
11 '95 and the subsequent ones, did you believe that any
11 stuff ready.
12 statement that you had made on those was false?
12
13 A.
13 away my stuff.
My belief was that I was not a person that the
Now, in reference to all those exempt W-4 forms that
I did not believe that. In fact, I attached to my --
MR. BECRAFT: Well, I need a minute to pull
14 first the 1995 one some documentation which substantiated my
14
THE COURT: That should work out fine.
15 belief.
15
THE WITNESS: Do you want these exhibits now?
16 Q.
16
MR. MURPHY: No, that's fine.
17 those forms W-4 were --
17
Thank you, Your Honor.
18
18
Did you believe that the statements that you submitted
CROSS EXAMINATION
19 leading.
19 BY MR. MURPHY:
20
20 Q.
21 Q.
Okay. What, if any, belief did you have regarding the
Ms. Kuglin, I want to start with some of these cases
21 that you based your conclusions on. Now, you would go over to
22 truthfulness of your exempt W-4 forms?
22 the Memphis State -- when I was there, it was Memphis State --
23 A.
23 it was the University of Memphis law library and study?
I believed that it was true, I believed that I did not
24 have taxable income for the year -- the prior years. I
24 A.
Yes.
25 believed that I did not have taxable income for the years that
25 Q.
And it's true that law library has all sorts of
CROSS - VERNICE KUGLIN
570
569
materials dating back, you know, a 150 years to the present,
A.
Right.
2 correct?
2 Q.
Now, the -- this Jack Cole case.
3 A.
That's correct.
3 A.
Yes, sir.
4 Q.
Okay. Now, this Pollock case that you were talking
4 Q.
Now, that's not a case that dealt with the federal
5 about, that case was decided in 1880, wasn't it?
5 income tax, was it?
6 A.
That's correct.
6 A.
No, that was a case that dealt with state income taxes.
7 Q.
And that case overruled the income tax prior to the
7 Q.
Right. And they don't mention the federal income tax
8 16th Amendment, correct?
8 in Jack Cole, do they?
9 A.
9 A.
No, they do not.
10 direct tax on property.
10 Q.
Okay. And the Oregon case, what year was that?
11 Q.
11 A.
I believe that was a 1925, 1930 case. I would have to
What they said is that Congress had the right to levy a
Okay. But that -- that case was prior to the 16th
12 Amendment, correct?
12 look at it.
13 A.
That was prior to the 16th Amendment, that's correct.
13 Q.
14 Q.
The 16th Amendment is what gave us the modern income
14 either, do they?
That case, they don't deal with the federal income tax
15 tax, correct?
15 A.
16 A.
16 between excises and occupations and individuals and
The 16th Amendment, yes, gave the Congress the power to
No, they deal with -- more defining the difference
17 lay and collect income taxes from whatever source derived.
17 corporations.
18 Q.
18 Q.
Right, from all income, right, from whatever source
Okay. So the answer would be no, they don't deal with
19 derived?
19 the federal income tax in that case?
20 A.
That's correct, that's what the amendment says, yes.
20 A.
No, they do not.
21 Q.
Now, the Brushaber is an 1896 opinion?
21 Q.
Now, the Flora case was decided in 1960, right?
22 A.
No, Brushaber is 1913, I believe.
22 A.
I don't have the case in front of me, but I think
23 Q.
1913?
23 that's about right.
24 A.
After the 16th Amendment was passed.
24 Q.
25 Q.
Okay. You're correct, it's a 1913 case.
25
I have got a copy of it.
MR. MURPHY: May I approach the witness, Your
572
571
income tax, correct?
Honor?
2
THE COURT: You may.
2 A.
I would say that is correct. I would have to read
3 Q.
Is that a copy of the Flora case?
3 through it again.
4 A.
Yes.
4 Q.
Well --
5 Q.
What year was that decided?
5 A.
But I'll accept that.
6 A.
Actually, that was 1960. I was thinking it was
6 Q.
I'll show you where it talks about that.
7 earlier.
7
8 Q.
Is that one of the cases you relied upon?
8 reference to it?
9 A.
Yes, that was one of the cases that I relied on to get
9 A.
I will accept your -- that that is the case.
10 some of the information, yes.
10 Q.
Well, you studied the case.
11
11 A.
I studied the case and I got information out of it, but
MR. MURPHY: Your Honor, could we have this
Okay. But as far as you know, there's no other
12 marked as an exhibit, please?
12 I don't know every line in every case. If you're saying
13
THE COURT: Yes, Exhibit 43.
13 that's the only reference to it, then --
14
COURT SECURITY OFFICER: I got it.
14 Q.
You don't dispute that?
15
15 A.
I will not dispute that.
16 Flora Case.)
16 Q.
Okay. And it's one sentence, right?
17 Q.
17 A.
I will accept that.
18 that you used to settle a dispute of the income tax, correct?
18 Q.
Well, why don't we have you read it?
19 A.
That's correct.
19 A.
If you want me to know everything that is in every
20 Q.
Okay. Whether you could go to district court or tax
20 case, I cannot do that today. I gleaned information -- I was
Now, the Flora case was a case that involved the method
21 court?
21 looking for supporting documentation for the answers of
22 A.
That was correct.
22 questions I had.
23 Q.
Okay. And, in fact, the Flora case is -- starts at
23 Q.
Okay. I have got a page from Exhibit 43 up there, and
24 page 630 and ends at page 658, and there's only one line in
24 it says our system of taxation is based upon voluntary
25 that case where they talk about the voluntariness of the
25 assessment and payment, not upon distraint. A full payment
574
573
requirement will promote the smooth function of this system; a
what that document is?
2 part payment rule would work at cross-purposes with it.
2 A.
3 A.
Right. And I have no disagreement with that sentence.
3 1040 for 1992 and has my name on it.
4 Q.
Okay.
4 Q.
Okay. Is that a copy of your 1992 tax return?
5 A.
Yes.
5
THE COURT: Would you pull the page down so we
This says it is an individual income tax return Form
6 can see the top of the page where the case name is?
6
7
8
8
THE COURT: 44.
9
9 Q.
Now, the Arkansas case that you cited is part of the
10 basis for your study. That case didn't deal with the federal
10 1992 Tax Return.)
11 income tax, did it?
11
12 A.
12 government's -- that was Exhibit Number 9 previously, I
No, it did not. It dealt with an excise tax or a tax
MR. BECRAFT: Your Honor, that was
13 that was being laid by the legislature of Arkansas.
13 thought.
14 Q.
14
And, in fact, those courts that dealt with those state
MR. MURPHY: Judge, I don't think it is. I
15 cases, they weren't federal courts, were they?
15 don't think we admitted --
16 A.
No, they were not. They were the state Supreme Courts.
16
17 Q.
Okay. Ms. Kuglin, you don't have the W-4s up there, do
17 assessments, and this is the 1992 tax return. It appears
THE COURT: Number 9 was the certificate of
18 to be separate.
18 you?
19 A.
I have my -- the 1995 W-4.
19
MR. MURPHY: Judge, I cannot find the W-4s, but
20 Q.
Okay. Can I have the 1995 W-4 form?
20 I have got some copies and I'm going to use some copies.
21 A.
Yes.
21
22 Q.
You filed income tax returns and paid your income taxes
22 sure. The W-4s should be Exhibit 15.
THE COURT: All right. You just need to --
23 from sometime in the mid '60s up until 1992, is that correct?
23 Q.
Do you have those up there, ma'am?
24 A.
That's correct.
24
25 Q.
And I'm going to show you a document, can you tell us
25 those to the witness during my examination. I thought 13,
MR. BECRAFT: If I may, Your Honor, I did hand
576
575
14 and 15 may be up there on the witness stand.
marked as an exhibit. Well, I don't think we need to do
2
THE WITNESS: Well, let me look again.
2 that.
3
THE COURT: Sure, Exhibit 15, and then --
3 Q.
4
THE WITNESS: What were they originally,
4
THE COURT: 45.
5 Larry -- Mr. Becraft?
5
MR. MURPHY: I had her testify about it.
6
6
THE COURT: That's no problem.
7 is a collective exhibit, Your Honor.
7
8
8 1988 Form 1040.)
MR. BECRAFT: Starts around 13. 15, I believe,
THE COURT: Okay. You may proceed. You can
Can you tell us -- let's have it marked as an exhibit.
9 use your copy.
9 Q.
How many exemptions do you claim on that W-4?
10
10 A.
It says six exemptions on there.
MR. MURPHY: Judge, that's fine.
11 Q.
Ms. Kuglin, we're going to use some copies.
11
MR. MURPHY: Now, if we can have this marked as
12 A.
All right.
12 the next numbered exhibit.
13 Q.
Can you take a look at Exhibit 44?
13
14 A.
Yes.
14 46, the new one?
15 Q.
In 1992, you had one dependent?
15
MR. BECRAFT: I wrote down 45.
16 A.
Yes, sir.
16
THE COURT: I tell you what, let me take a look
17 Q.
Okay. And would you take a look at this document, it
17 at it and ask you -- this is Exhibit -- let's talk at side
THE COURT: Are we -- is this 45, or is this
18 appears to be a 1988 Form W-4. Do you recognize that
18 bar.
19 document?
19
MR. MURPHY: I think it is going to be 46.
20 A.
Yes, it has my signature on it.
20
THE COURT: I want to see 45, and, Mrs. Saba,
21 Q.
Okay. And is that a W-4 you submitted out at FedEx?
21 we need to get them all -- we just need to get them all
22 A.
Yes, it is.
22 sequentially sorted. It looks like we're having a little
23 Q.
Okay. And what date did you submit it?
23 problem here.
24 A.
I submitted this on June the 7th of 1989.
24
THE WITNESS: I have 37 and 40 here also.
25
THE COURT: Let's pick them all up.
25
578
577
Q.
What date did you submit it?
2 bench.)
2 A.
I submitted this on 11-26 of 1990.
3
THE COURT: Is there a 45?
3 Q.
And how many exemptions did you claim?
4
MR. BECRAFT: That's the -- no, no, 44 is
4 A.
It shows 10 exemptions.
5 Q.
Thank you. Now, at the time, was your son living with
5 the -6
THE COURT: 44 is the --
6 you?
7
MR. MURPHY: There is not a 45.
7 A.
8
THE COURT: 44 is the '92 tax return.
8
9
MR. MURPHY: It is right there.
9 A.
10
THE COURT: 45, I think, is this.
10
MR. BECRAFT: Is that 46?
11
MR. BECRAFT: Yeah, that's it, that's correct.
11
THE COURT: That's 46. And it's the W-4 for
12
THE COURT: It is the 1988 W-4 form. This is
12 1990.
1990, my son -MR. MURPHY: Judge, we move this into evidence.
No.
13 45. Okay. We're okay.
13
14
MR. BECRAFT: No objections to their admission.
14 1990 W-4 Form.)
15
15 Q.
16 tell us what that document is?
16 court.)
17
THE COURT: Got them in order now?
17 A.
Yes, that's a 1995 W-4 form.
18
MR. MURPHY: I think so, Judge.
18 Q.
And is that your W-4 form?
19
THE COURT: I think so.
19 A.
Yes, it is.
20 BY MR. MURPHY:
20 Q.
And what is the date on that form?
21 Q.
21 A.
That's December 30th, 1995.
22 document is that?
22 Q.
23 A.
This is -- this is a 1990 Form W-4.
23
24 Q.
Okay. And was that a W-4 you submitted to FedEx?
24 marked as the next numbered exhibit?
25 A.
Yes, it is.
25
Ma'am, I'm going to pass to you another document, what
MR. BECRAFT: It has been admitted into
580
579
evidence, Your Honor.
of this form is not there.
2
MR. MURPHY: We can't find it, Judge, and --
2 A.
Yes, this is a W-4.
3
THE COURT: Mrs. Saba, we need Exhibits 13, 14
3 Q.
Does that appear to be a --
4 and 15.
4 A.
For 1996, yes.
5
5 Q.
-- government document?
6 Honor.
6 A.
Yes.
7
7 Q.
Is it similar to the document that you executed?
8 it as 47.
8 A.
Yes, it is.
9
THE CLERK: 13, 14 and 15?
9
10
THE COURT: The collective W-4 forms are
10 form marked as an exhibit.
MR. BECRAFT: I have it as Exhibit 17, Your
THE COURT: It won't do any harm for us to mark
MR. MURPHY: Judge, could we have this blank
11 Exhibit 15.
11
THE COURT: Yes, that will be 47.
12
MR. MURPHY: Judge, I've got 15.
12
13
THE COURT: Okay. We're all right. We will
13 Blank Form 1040.)
14 not mark the other document as 47.
14 Q.
Ma'am, what I'm going to put up here this is this Form
15
MR. MURPHY: We will withdraw that, Your Honor.
15 1040.
16
THE COURT: Okay.
16 A.
Yes.
You see the part where it says exemption from
17 Q.
Okay. Now, this is your 1995 -- or 1996 W-4?
17 Q.
18 A.
That's what it says. It has got 1996 crossed out and
18 withholding?
19 1997 on there. One of the situations that would happen at
19 A.
Yes, I do.
20 FedEx is they didn't always have the current year forms.
20 Q.
Could you read that for us?
21 Q.
Is that a form that you claimed exempt on?
21 A.
The -- from where it says withholding or the yellow
22 A.
It is a form that I claimed exempt signed on January
22 highlighted area?
23 the 1st of 1997.
23 Q.
Why don't you read exemption from withholding?
24 Q.
24 A.
It says exemption from withholding, read line seven of
Can you take a look at this form and tell me what that
25 form is? Now, I don't mean to interrupt you, but the top part
25 the certificate below to see if you can claim exempt status.
582
581
If exempt, only complete lines one, two, three, four and seven
A.
I believe that the testimony yesterday was to that
2 and sign the form to validate it. No federal income tax will
2 effect.
3 be withheld from your pay. Your exemption expires February
3 Q.
4 18th, 1997. Note: You cannot claim exemption from
4 same sort of language up there at the top, doesn't it?
5 withholding if, one, your income exceeds $650 and it includes
5 A.
Yes, it does. I would presume it does.
6 unearned income, for example, interest and dividends; and two,
6 Q.
And you earned interest in 1995 too, didn't you?
7 another person can claim you as a dependent on their return.
7 A.
I would have to defer to the testimony yesterday.
8 Q.
Okay. In 1996, you earned interest, didn't you?
8 Q.
Okay. Now, regarding your 1993 tax situation, the IRS
9 A.
I did earn interest, yes.
9 levied against the taxes that had been withheld from your
10 Q.
Okay. Can I get that exhibit back from you?
10 paycheck, didn't they?
11 A.
Yes.
11 A.
12 Q.
Look for something else. Now, is that your 1998 W-4?
12 they did an additional levy.
13 A.
That is signed by me on January 1st of 1998.
13 Q.
Okay. Well, but they got all that money, right?
14 Q.
Okay. And again, this is coming from Collective
14 A.
Yes, I -- in 1993, withholding was taken out of my
Okay. And it's true, isn't it, the 1995 W-4 has the
They did not levy against the taxes that were withheld,
15 Exhibit 15. Can you read the language from the 1998 W-4 that
15 check.
16 begins up at the top with note?
16 Q.
And the IRS got al that money, right?
17 A.
17 A.
I'm presuming, yes, that FedEx sent it to the IRS.
18 withholding, if, one, your income exceeds $650 and includes
18 Q.
And you didn't get a refund of a dime of your money in
19 unearned income, for example, interest and dividends; and,
19 '93, did you?
20 two, another person can claim you as a dependent on their tax
20 A.
No, I did not.
21 return.
21 Q.
Now, in 1994, the IRS got the withholding again, didn't
22 Q.
22 they?
It says: Note: You cannot claim exemption from
And this information was on the form when you signed
23 it, correct?
23 A.
Yes, they did.
24 A.
Yes, it was.
24 Q.
Okay. And did you get a refund of any of that
25 Q.
And you earned interest income in 1998, didn't you?
25 withholding?
584
583
A.
MR. BECRAFT: One moment, Your Honor.
No, I did not file a 1040 form for a refund.
2 Q.
So you didn't get a refund in '93, correct?
2
3 A.
I did not file for a refund in '93, and I did not file
3 Q.
Now, that letter that you just said you received, that
4 for a refund in '94.
4 was a letter from the IRS about your taxes, correct?
5 Q.
5 A.
Yes, it was.
6 not get a refund of your taxes in 1993?
6 Q.
Now, did you receive that letter from the IRS?
7 A.
No, I did not.
7 A.
Yes, I did.
8 Q.
You did not get a refund of your taxes in 1994, did
8 Q.
Okay. And is that also a letter -- and you received
Let's back up a second and answer my question, you did
9 that June of 1997?
9 you?
10 A.
No, I did not.
10 A.
That was June 16th of 1997.
11 Q.
Okay. Thank you, ma'am. Now, the IRS had a number of
11 Q.
And that's a letter about your taxes, isn't it?
12 contacts with you regarding your tax situation, correct?
12 A.
Yes, it is.
13 A.
That's correct.
13 Q.
Okay. And about asking -- putting you on notice that
14 Q.
For example, on October the 31st of 1995, did you
14 they have no record of your 1040 and indicating that they will
15 receive this letter?
15 assess tax penalties against you, correct?
16 A.
That letter looks familiar, yes.
16 A.
17 Q.
So do you believe you received it?
17
18 A.
Yes, I do.
18 as the next numbered exhibit.
That's correct.
MR. MURPHY: Your Honor, we ask this be marked
19
20 exhibit, Your Honor.
20
THE COURT: 49.
21
21
19
MR. MURPHY: Mark this as the next numbered
MR. BECRAFT: May I look at it, Your Honor? No
22 objections, Your Honor. I believe that's 48.
22 June 16, 1997 Letter.)
23
23 Q.
24
24 dated July the 16th of '97, what is that?
25 October 31, 1995 Letter.)
25 A.
Ma'am, I'm going to pass to you another document that's
This is another letter from the IRS, the Department of
586
585
Treasury, dated July 16th, 1997. It says notice of
Q.
And you didn't ever go talk to them about this?
2 deficiency.
2 A.
3 Q.
And you received that letter?
3 to this letter.
4 A.
Yes, I did.
4 Q.
5 Q.
And this is giving you notice of a deficiency and the
5 talk to the IRS about your tax situation?
I did not go talk to them. I had an attorney respond
Okay. But did you have an opportunity to sit down and
6 payment of your taxes, correct?
6 A.
Yes, I did.
7 A.
7 Q.
Okay. And you're not disputing that?
8 A.
I'm not disputing that.
9 Q.
Ma'am, I pass a document to you dated June 28th, 1999,
10
THE COURT: 50.
10 can you tell us what that is?
11
11 A.
12
12 intent to levy, notice of your right to a hearing.
8
That's correct.
This is a letter that says final notice, notice of
13 Q.
And that is addressed to you?
14 Q.
14 A.
That is addressed to me.
15 22nd of 1999. And did you receive that letter?
15 Q.
And this particular letter gives you notice that the
16 A.
16 IRS is going to put a levy against you?
Ma'am, I'm going to pass to you a document dated June
This letter looks familiar, June 22nd, yes.
17 A.
That's correct.
18 Q.
Okay. And put a levy against you for your taxes that
19
THE COURT: 51.
19 you owe, correct?
20
20 A.
17
That's correct. The taxes that they say I owe, yes.
21
22 Q.
22 marked as the next numbered exhibit?
Now, this letter that has been marked 51, this gives
23 you notice that you have got an appointment to talk to the
23
MR. BECRAFT: No objections.
24 IRS, correct?
24
THE COURT: 52.
25 A.
25
Yes, it does.
588
587
June 28, 1999 Letter.)
that you, in fact, still owes taxes to the Internal Revenue
2 Q.
2 Service?
Ma'am, I'm going to pass to you another letter dated
3 July the 6th, 1999 from the IRS. Did you receive that letter?
3 A.
Yes, it tells me that the Internal Revenue Service
4 A.
Yes.
4 believes that I still owe them some taxes.
5 Q.
Okay. And that letter is also a letter where there's
5
MR. MURPHY: If we could mark this as the next
6 an attempt to set up an appointment to sit down and talk with
6 numbered exhibit, Your Honor.
7 you about your taxes?
7
8 A.
8 Honor.
That's correct.
MR. BECRAFT: Let me take a look at it, Your
9
No objections, Your Honor.
10
THE COURT: 54.
11
11
12
12 October 30, 2000.)
13
13
9
MR. BECRAFT: Your Honor, we probably going to
14 July 6, 1999 Letter.)
14 need a side bar on this.
15 Q.
15
16 you receive this document?
16
17 A.
17 bench.)
Ma'am, I'm going to pass to you another document. Did
I'm not saying I didn't. This document doesn't seem as
18 familiar. I do know a copy was sent to Ray Pope who had my
18
MR. MURPHY: Judge, this is -- Ms. Kuglin
19 power of attorney at that time in Florida.
19 disputed part of the assessment and collection process,
20 Q.
Okay. How about this reminder document?
20 and there's a tax court opinion, and I would submit that
21 A.
This reminder document is familiar.
21 it was issued within the time to file for 2001 and that
22 Q.
Okay. And do you believe you received that reminder
22 that would provide her with notice of her obligation to
23 document?
23 file.
24 A.
Yes.
24
25 Q.
And what this reminds you -- document reminds you of is
25 government is coming from. It bears a date of February
MR. BECRAFT: I don't understand where the
590
589
25th, 2002. I expect that the answer from this witness is
I just want a restroom break.
2 that she had her attorneys -- she didn't find out about
2
3 that decision until right before this case got started, so
3 Anybody be upset if we take an early lunch today? I
4 if the witness' response is no foundation, no receipt, I
4 didn't think so. I don't blame you. We will take an
5 object to its admission.
5 early lunch, and then I will have a chance to talk with
6
6 the lawyers just a little bit about some things that will
MR. MURPHY: Judge, I'm probably going to ask
THE COURT: Why don't we take an early lunch?
7 her first if she took her case to tax court and if she
7 come up later, and that will save us maybe time.
8 knows what the outcome of it is and when did she learn
8
9 that.
9 today. Don't let anybody talk with you about it and we
Ladies and gentlemen, you get a long lunch
10
THE COURT: Okay.
10 will see all of you at 2:00. I will let the witness step
11
MR. BECRAFT: If the answer is sometime after
11 down, of course, and I will hold the lawyers here for a
12 April 15th of 2002, I would object, Your Honor.
12 moment, we're going to go over a couple of more things.
13
13 We will let you be excused. Thank you very much.
MR. MURPHY: Well, I just don't think the
14 decision comes in then.
14
(Jury out at 12:10 a.m.)
15
15
MR. BECRAFT: Can she waive her appearance in
16 the courtroom for a few minutes, Your Honor, and we can
16 court.)
17
THE WITNESS: Your Honor, may I ask you a
17 proceed in her absence?
18 question, please?
18
19
19 questions on the --
THE COURT: It would be better to let you ask
THE COURT: Is it okay we talk about a few
20 your lawyer a question.
20
THE WITNESS: That's fine.
21
21
THE COURT: In fact, I'm just going to talk for
THE WITNESS: All right. May I ask my
22 lawyer --
22 a second about them, about the instructions.
23
23
THE WITNESS: I'm in good hands.
24
THE COURT: Thank you. I'm just going to ask
THE COURT: You can walk around there and ask
24 them.
25
THE WITNESS: This is a physiological question.
25 them a couple of questions.
592
591
MR. BECRAFT: Go ahead.
2
THE COURT: Gentlemen and ladies, we do need to
probably use Exhibit -- or number 11 as sort of a
2 transition into the willfulness discussion. I will
3 make sure that we have all of the materials that are going
3 probably use -- I'm not real clear on this number 12. I'm
4 to be submitted by everybody. Can I get the materials
4 not so clear that the proof -- what the proof has been on
5 that I got from -- that I sent back in the back that have
5 number 12.
6 the notations -- I need the defendant's marked up
6
7 exhibits -- instructions, proposed instructions. I might
7 withdraw?
8 have them here, let me look. I do have those proposed
8
THE COURT: You're going to withdraw it.
9 instructions out here. Thanks.
9
MR. BECRAFT: I kind of like to offer to the
10
10 court kind of a series of instructions, kind of basically
Okay. Let me run through them real quick, the
MR. BECRAFT: Your Honor, could I respond and
11 defendant's proposed instructions, the government's
11 get you in your frame of mind on willfulness. I will just
12 proposed instructions are pretty much out of Sand, and
12 tell the court what I'm primarily driving at is the long
13 they're not very unusual. The defendant did have a few
13 one 18, I believe it is.
14 things that we need to talk about. I am going to try to
14
15 use just Defendant's 11. Some of these are not a problem,
15 so is that not one you're going to pursue?
16 but we're not going to include the instructions on lesser
16
17 included offense. I'm just using --
17
THE COURT: Okay. Let me mark through it,
18
MR. BECRAFT: I'm sorry, Your Honor.
18 because I wasn't so clear about that. Let me make a note
19
THE COURT: Lesser included offense.
19 about it then.
20
MR. BECRAFT: Okay.
20
21
THE COURT: We have already talked about. I'm
21 just tell the court.
THE COURT: Okay. And I wasn't sure about 12,
MR. BECRAFT: Let me kind of pull -- I will
22 just using the Sand instruction, which is not much
22
THE COURT: Sure.
23 different really from the Devitt instruction on elements
23
MR. BECRAFT: Don't be concerned with 12, 13,
24 of the crime charged.
24 14, although 15 has relationship to one later on that I
25
25 think the court is already getting into anyway, but we can
And then we go over to willfulness. I will
594
593
pull 15, 16, and I think the court said in reference to
deterring others from committing crime. Well, that's
2 17, at least in reference to introductory instructions
2 true, that's always true. I don't usually have to give
3 that you gave, you seemed to indicate to me that you were
3 that, but that's all right. And I have some language from
4 going down that road.
4 one of the Supreme Court decisions which deals with 30,
5
5 but there's nothing wrong with 30, particularly.
THE COURT: I have already got some language
6 about that.
6
7
MR. BECRAFT: Yeah. Beyond that, that's --
7 for the topic to be covered.
8
THE COURT: You may want to look at that. I
8
THE COURT: Okay.
9 did revise 18 just a little. Because we have to take out
9
MR. BECRAFT: The court can pick the language.
10 for failing to file any tax return, because there's no
10
THE COURT: Okay. And it is true in 31 that
11 lesser included offense, so I assume that's -- you want --
11 the commissioner does have the power to make a return and
12 that needs to go out, and I changed it and said if there
12 assess your tax when no return has been filed. That's
13 is any doubt in your mind as to this issue -- well, if
13 already been discussed. I mean they have done that in the
14 there's any reasonable doubt, that's the standard. I will
14 case.
15 change that. Okay. We will use 18, if we can. 19 is
15
16 correct, no reason not to use that.
16 it, because I did have some exhibits on that, but as the
17
17 court saw, I kind of collapsed our exhibits and we didn't
MR. BECRAFT: The court is going to give it
MR. BECRAFT: Well, Your Honor, let me withdraw
18 cover that point, so, at least from our viewpoint, I'm not
18 then?
19
MR. BECRAFT: All I'm asking, Your Honor, is
THE COURT: Well, defendant is not presumed to
19 insisting on it.
20 know the law, that's true. I mean they're not required to
20
21 be legal experts, so -- otherwise, it wouldn't make much
21 need to be given. It's one of those things where it is
22 sense.
22 sort of surplus probably, and if you have withdrawn it,
23
Then I go over to the next thing that would be
THE COURT: If you don't want it, it doesn't
23 there is no reason to worry about it.
24 includable probably would be probably 29. You hae no
24
And what I have done on the representations
25 right to find the defendant guilty only for purposes of
25 question is I have basically said at one point that the
596
595
defendant can reply on Supreme Court decisions, on IRS
is we will try to get you a copy of the draft material as
2 publications and regulations and instructions, which is
2 soon as possible after lunch.
3 true.
3
4
MR. BECRAFT: The court give an instruction
All right. Gentlemen, ladies, thanks very
4 much.
5 like that, and I consider that to be then, therefore,
5
(Lunch recess taken at 12:25 until 2:00 p.m.)
6 covered or covering this requested instruction.
6
THE COURT: All right. The witness can come
7
7 back around.
THE COURT: Right. And Mr. Murphy agrees
8 that's the situation, so I don't see any reason -- don't
8
MR. MURPHY: The government is ready, Judge.
9 you, Mr. Murphy?
9
THE COURT: Mr. Tuggle, we can bring the jury
10
10 in.
MR. MURPHY: Judge, I don't have any objection
11 to that.
11
12
12
13 covered. I wanted to cover these, and I may have included
13
THE COURT: All right. Mr. Murphy, you may
14 some things now that I can -- I will narrow it down a
14 proceed.
15 little more. Mr. Murphy, the cross is going to take a
15
16 little while longer, right?
16 Q.
17
17 these documents that you contend you relied upon. You have
THE COURT: I think we have got everything
MR. MURPHY: Yes, sir, Your Honor, but I -- you
Ms. Kuglin, I want to talk a little bit about some of
18 know, I won't belabor it. I will make my points -- part
18 got the article by Ms. Claire Kelly?
19 of the problem I was trying to find what I needed, and I
19 A.
Yes.
20 will get up here before we come back from lunch, and I
20 Q.
Okay. I don't know that you need to look at it. You
21 will get organized.
21 can probably answer this without looking at it.
22
22 A.
All right.
23 you have a chance -- that's a good thing to do.
23 Q.
But Ms. Kelly was not an IRS employee or government
24
24 official, was she?
THE COURT: Well, that's no problem. We'll let
I have got this sort of -- I fine tuned a
25 little bit some of the Sand materials, so what we will do
25 A.
That's correct.
598
597
Q.
Okay. And this is reprinted from a publication called
A.
Yes.
2 Justice Times dated January of 1979?
2 Q.
3 A.
I believe so, yes.
3 official of any type, does he?
4 Q.
Did you get this as part of a package of materials you
4 A.
No, he holds himself out to be an attorney at law.
5 bought to drop out of the tax system?
5 Q.
Okay. But you don't know whether he is or not, all you
6 A.
6 know is you saw an advertisement?
I cannot answer ten years later whether I bought this
He also doesn't hold himself out to be a government
7 material or whether I picked it up at a seminar. I picked it
7 A.
That's correct. I've not met the man.
8 up for information only.
8 Q.
Must You Pay Income Tax, that's another article you
9 Q.
9 cited; that's not a government publication, is it?
Okay. But Ms. Kelly is not a government official of
10 any type?
10 A.
No, it is not.
11 A.
Not that I know of.
11 Q.
Okay. And would you agree with the statement in that
12 Q.
Okay. Now, what you also relied on was a publication
12 article that, quote, money is taken from the productive sector
13 called Deceptive IRS Code Words?
13 of society by the income tax to support the nonproductive
14 A.
That's correct.
14 sector, foreign aid, give-aways in a bloated needless
15 Q.
Okay. And that was the document that said shall
15 bureaucracy. Would you agree with that statement made in that
16 doesn't mean shall?
16 document?
17 A.
That's correct.
17 A.
18 Q.
Okay. Now, that's not a government publication, is it?
18 that there is information and there is knowledge --
19 A.
No, it is not, and I should say that I did not rely on
19 Q.
In reading all the material that I came across, I find
Well, what I asked is would you agree with that
20 the document itself. That document led me to other
20 statement in that document?
21 information that I relied on.
21 A.
22 Q.
Okay. Okay. But that's not a government document?
22 document.
23 A.
No, it is not.
23 Q.
24 Q.
And this advertisement from W. James Knowles, attorney
24 is the Internal Revenue investigation.
25 at law?
25
I do not necessarily agree with that statement in that
Okay. Turning to what was marked as Exhibit 28, this
MR. MURPHY: If I can approach, Your Honor.
600
599
THE COURT: You may.
2 A.
I believe I have it here. Oh, no, I do not. There we
2 1913 that had to do with United States residents. We didn't
3 admit that into evidence, but I have got a copy of it.
3 go.
4 Q.
that had to do with the federal income tax under the Act of
Now, that Internal Revenue Code investigation that is
4 A.
Let me just look this over, briefly. Yes. I recognize
5 going on there, that wasn't an investigation that had to do
5 the document.
6 with income taxes, that had to do with the alcohol tax,
6 Q.
That's dated 1915?
7 correct?
7 A.
That is dated -- federal income tax under the Act of
8 A.
8 1913, and the date was 19 -- the date of this opinion was
That had to do with the Internal Revenue Service, and
9 it was Mr. Avis who was the head of Alcohol, Tobacco and
9 1915.
10 Firearms at that time.
10 Q.
Okay. Thank you.
11 Q.
11 A.
Thanks.
Okay. But on Thursday, February the 3rd, 1953, when
12 these statements were made, what they were talking about was
12
13 politics and the alcohol tax department?
13 Your Honor.
14 A.
That's correct.
14
15 Q.
Okay. And this statement about voluntariness of the
15 witness?
16 income tax, that's a one sentence deal, right?
16
17 A.
17 Q.
Yes, he was showing the difference between the income
MR. BECRAFT: No objections to the exhibit,
MR. MURPHY: Your Honor, can I approach the
THE COURT: You may.
Ma'am, I'm going to show you a bunch of 1040 returns
18 tax side of the IRS and the ATF side.
18 for 1996 through 2001. Can you look at those, and do you
19 Q.
19 recognize those as 1040 returns?
Now, you also said you relied on what's been marked as
20 Exhibit 40. I'll pass you a copy of that.
20 A.
Yes, I do.
21 A.
Thank you.
21 Q.
Now, highlighted on each one, there's an OMB number,
22 Q.
There you go, ma'am.
22 isn't that correct?
23
Now, that was treasury decisions from 1916, correct?
23 A.
That's correct.
24 A.
That's correct.
24 Q.
What is that number?
25 Q.
Okay. You also, I believe, talked about a treatise
25 A.
That number is 1545-0074.
602
601
Q.
Okay. Now, if you would look at --
Q.
Ma'am, ma'am.
2 A.
Yes, that is correct.
3 evidence as a collective exhibit, all those tax returns,
3 Q.
Is it all over there?
4 the blanks.
4 A.
It is all over that list, along with many others, yes.
5
5 Q.
Right, in several places. Would you look and see if
6
6 that number is at -- for Section 1.6012-1, that particular
2
MR. MURPHY: Judge, if we could move that into
7 Tax Returns.)
7 control number?
8 Q.
And that OMB number is on every one of those, correct?
8 A.
That was 1. --
9 A.
I am presuming that it is. I did not look at every
9 Q.
6012-1.
10 A.
I don't find a 1.60. Maybe I'm missing it here
10 one.
11 Q.
Look at every one, please.
11 somewhere.
12 A.
All right. That's correct.
12 Q.
13 Q.
Okay. Thank you. Now, was your study -- you described
13 the exhibits up. Do you see where I have circled?
If I could take a look at it. I didn't want to mark
14 your study of the income tax law as a thorough study, correct?
14 A.
Yes.
15 A.
I believe it was as thorough as I could do of it.
15 Q.
Okay. Now, it's true, isn't it, that that particular
16 Q.
Okay. And basically one of your contentions is that
16 portion of the CFR has to do with individuals required to make
17 under the OMB requirements, and you submitted as Exhibit 37, a
17 returns of income and specifies that the Form 1040 return is
18 list of OMB control numbers for documents, correct?
18 to be used?
19 A.
That's correct.
19 A.
20 Q.
Okay. Now, those income tax returns had the number
20 applicable form for 1.6012.
It's saying on this form that the form 1545-0074 is an
21 1554-0074 on it, right?
21 Q.
Okay. Can you -- you see up here on the screen?
22 A.
That's correct.
22 A.
Yes.
23 Q.
Now, that control number is all over that list that you
23 Q.
Okay. And would you read the highlighted language?
24 put into evidence, isn't it?
24 A.
Yes, it applies to individual citizens or residents,
25 A.
25 and it says in general except as provided in subparagraph two
Yes, that is correct. However, the only number --
604
603
of this paragraph, an income tax return must be filed by every
A.
I'm sorry.
2 individual for each taxable year beginning before January 1st,
2 Q.
I need you to answer the question, that's what it says?
3 1973, during which he receives six hundred dollars or more of
3 A.
That's what it says, yes, sir.
4 gross income and for each taxable year beginning after
4
5 December 31st, 1972, during which he received $750 or more of
5 marked as an exhibit?
6 gross income. If such individual is, one, a citizen of the
6
7 United States whether residing at home or abroad; two --
7
MR. BECRAFT: Your Honor, could we have a side
8 excuse me.
8 bar?
9 Q.
Let's --
9
10 A.
-- a resident of the United States even though not a
10
MR. MURPHY: Judge, could we have the CFR
11 citizen thereof; or, three, an alien bona fide resident of
11 bench.)
12 Puerto Rico during the entire taxable year.
12
13 Q.
13 offer is for the whole rather than the parts that we have
Okay. And then if you would flip over, would you read
MR. BECRAFT: I think that the prosecution's
14 that highlighted language?
14 covered in testimony.
15 A.
15
Yes, this is number six, I believe, and it says forms
MR. MURPHY: Judge, I will make copies and
16 of return. Form 1040 is prepared for general use in making
16 substitute it later.
17 the return required under this paragraph.
17
THE COURT: Just the passages.
18 Q.
18
MR. MURPHY: Just the passages. I don't have a
Now, you came across that section of the Code of
19 Federal Regulations in your research, didn't you?
19 problem with that, Judge.
20 A.
Yes, I did.
20
21 Q.
Okay. And, in fact, that's what that code says, isn't
21 court.)
22
22 it?
23 A.
That is what that code says. That is not in the
THE COURT: We're going to make copies of the
23 pages and passages that are referred to and not put the
24 subtitle --
24 whole book in, because that would be too voluminous, so we
25 Q.
25 will make copies of those particular passages that are
Ma'am, ma'am.
606
605
referred to.
Q.
2
2 A.
Oh, I'm sorry, no.
3 the break, and what was the exhibit number for that?
3 Q.
There are several decisions that have rejected this
4
THE COURT: 56.
4 argument that you don't have to file a tax return because of
5
5 the OMB number, correct?
MR. MURPHY: Judge, I will take care of that at
Well, I'm talking about the OMB aspect.
6 CFR Passages.)
6 A.
7 Q.
7 accept that that is what you're stating that that is correct.
Do you have your IRS code book with you up there,
That is not something that is of my knowledge. I will
8 ma'am?
8 Q.
Okay. But you didn't -- you didn't go to those law
9 A.
I do.
9 books and conduct a search to see if the courts had upheld
10 Q.
Could you open it up -- oh, I don't mean to skip
10 this kind of argument, did you?
11 around. Before we go there, now, did you look up -- you had
11 A.
No, I relied on the IRS's index which was required
12 access to the Memphis State law library?
12 under the Paper Reduction Act.
13 A.
That's correct.
13 Q.
14 Q.
And they have a complete collection of federal law
14 would go to Section 1.
Okay. If you would get your code book out, if you
15 books there, correct?
15 A.
All right.
16 A.
Yes, they have a lot of books there.
16 Q.
Section 1 reads tax imposed, correct?
17 Q.
Did you read the case of United States versus Wunder, a
17 A.
Yes, that's correct.
18 Sixth Circuit, 1990 case?
18 Q.
And it -- subsection C, it reads unmarried individuals
19 A.
No, that is not familiar to me.
19 other than surviving spouses and heads of household?
20 Q.
So you didn't run across the Wunder case where they --
20 A.
That's correct.
21 basically, the court rejected this type of argument having to
21 Q.
Okay. And it says -- it follows that there is hereby
22 do with OMB?
22 imposed on the taxable income of every individual other than a
23 A.
23 surviving spouse as defined in Section 2 or the head of a
There are a lot of decisions that rejected this type of
24 argument. The courts don't seem to be able to agree on the
24 household as defined in Section 2B, who is not a married
25 definition of income.
25 individual as defined in 7703, a tax determined in accordance
608
607
with the following table.
A.
Well, I believe that that was Chief Justice's ruling,
2 A.
That is what it says.
2 Justice White in the Brushaber case, which actually defined
3 Q.
And you would agree that that is what it says?
3 income as an excise tax.
4 A.
I agree that's what it says.
4 Q.
5 Q.
Okay. Now, would you turn to Section 7203 of your code
5 in 1913, I'm talking about the current tax code.
Well, I'm not talking about a tax code that they passed
6 book? Once you get to 7203, let me ask you some other
6 A.
That was not a tax code, that was a Supreme Court
7 questions real quick.
7 decision based on the --
8 A.
I have 7203.
8 Q.
9 Q.
Going back to your one, in your study of the tax code,
9 subject to income tax.
Ma'am, no federal court has held that wages aren't
10 you came across Section 1, didn't you?
10 A.
I believe the Brushaber case did.
11 A.
Yes, I did.
11 Q.
Well, after Brushaber, in the last hundred years.
12 Q.
Okay. So today is not the first time you're hearing
12 A.
I don't -- I can't say that, because I haven't read all
13 about this?
13 of them.
14 A.
Not at all.
14 Q.
Okay. But you did extensive research?
15 Q.
In fact, you came across it years ago, didn't you?
15 A.
Yes, I did research on cases which I had been given
16 A.
Yes, I did, when I was doing my research.
16 information, would explain certain questions that I had, yes,
17 Q.
Now, in -- what your belief is that the government
17 but I did not -- I have not read every case, that would be
18 can't tax your wages or they can't tax your income you make as
18 impossible.
19 a pilot, right?
19 Q.
Okay. Look at 7203.
20 A.
20 A.
All right.
21 that occupations of common right are not taxable as an excise
21 Q.
Now, that makes a penalty or provides that any person
22 tax. In other words, income tax.
22 required under this title to pay any estimated tax or tax
23 Q.
23 required by this title or by regulations made under the
What my understanding is that the courts have ruled
Okay. Well, no federal court that has dealt -- that
24 has applied the current income tax code has made that ruling,
24 authority thereof to make a return, keep any records or supply
25 have they?
25 any information who willfully fails to pay such estimated tax
610
609
or tax make such return, keep such records or supply such
Q.
2 information at the time or times required by the law or the
2 help you from the United States Code Annotated. What does
3 regulations shall, in addition to other penalties, be guilty
3 chapter 61 deal with.
4 of -- and I'm just going to say a crime.
4 A.
It deals with gross income defined. Oh, 6001?
5 A.
Right.
5 Q.
Right.
6 Q.
But that provides that if you don't file, you have
6 A.
Are you talking about Section 61 or Section 6001?
7 committed a crime, right?
7 Q.
I'm talking about chapter 61 of subtitle A.
8 A.
8 A.
Well, let me look for chapter 69.
9 this title shall make a return.
9 Q.
This index might help you.
10 Q.
Right. Okay. Now, can you turn to 6651 of your tax
10 A.
All right. Okay. It says chapter --
11 code? Let me ask you this: You came across 7203 in your
11 Q.
What does it say there highlighted?
12 study of the tax code.
12 A.
It says subtitle A, income taxes, I'm looking for
13 A.
Oh, yes. What was the other section?
13 chapter 61.
14 Q.
6651.
14 Q.
Why don't you go down here, what does chapter 61 say?
15 A.
I have it.
15 A.
This does not say chapter -- this is -- oh, chapter, it
16 Q.
6651, it's true, isn't it, provides for penalties for
16 says information returns.
I agree it says any person required under any tax of
Okay. And if -- I have got an index here that might
17 failure to file a tax return, an income tax return?
17 Q.
That does say chapter?
18 A.
18 A.
Right, right, I see what you mean now, because that
Well, it says any -- the failure to file any return
19 required under authority of subchapter eight of chapter 61, it
19 other section referred to 61, and you brought -- right, okay,
20 says chapter 51, it says alcohol, tobacco, cigars, cigarettes,
20 now, I have got it.
21 cigarette papers and a list of numerous other ones.
21 Q.
It's true that it said --
22 Q.
22 A.
We're on the same page.
23 61. Subchapter A, it's true, isn't it, that's the subchapter
23 Q.
Okay. So what it is referring to is --
24 of the Internal Revenue Code that has to do with income taxes?
24 A.
6001.
25 A.
25 Q.
6001?
Let's back up, let's talk about subchapter A of chapter
I would agree with that.
612
611
A.
Right.
2 Q.
Okay. Let's talk about what 6001 says. Now, it's
A.
Yes, I did.
2 Q.
Okay. And you were aware of the regulation that had to
3 true, isn't it, that 6001 says every person liable for any tax
3 do with the 1040s we talked about before you stopped filing
4 imposed by this title or for the collection thereof shall keep
4 income tax returns, correct?
5 such records, render such statements, make such returns and
5 A.
6 comply with such rules and regulations as the secretary may
6 authority by which they could ask me to file, it was this
7 from time to time prescribe. Whenever in the judgment of the
7 section, 6001, section 6011
8 secretary it is necessary, he may require any such person
8 Q.
9 served -- by a notice served upon such person or by
9 regulation we talked about?
10 regulations to make such returns, render such statements or
10 A.
The regulation 1.1-1?
11 keep such records as the secretary deems sufficient to show
11 Q.
Well, no, this was -- I'm talking about -- this
12 whether or not such person is liable for tax under this title.
12 regulation in this book. Remember, you read it, we put it on
13 The only records which an employer should be required to keep
13 the screen, it was in yellow.
14 under this section in connection with charge receipts, records
14 A.
It was, I believe, in the 6000 series of that section.
15 necessary to comply with Section 6053 and copies and
15 Q.
Yes, ma'am.
16 statements furnished by employees thereunder or employees
16 A.
Right.
17 under Section 6053.
17 Q.
You have been aware of that for several years?
18 A.
That's correct, that's what it says.
18 A.
Yes, I have.
19 Q.
Now, if you would turn to 6011.
19 Q.
Okay. In fact, you were aware of that before you
20 A.
6011, I have it.
20 stopped filing income tax returns?
21 Q.
Yes, ma'am. That says, it's true -- and this -- this
21 A.
That's correct.
22 6001 section, you have known about that for several years?
22 Q.
Okay. Now, 6011 says when required by regulations
23 A.
Yes, I did.
23 prescribed by the secretary any person made liable for any tax
24 Q.
You knew about that before you stopped filing income
24 imposed by this title or with respect to the collection
25 taxes?
I was aware of the fact that the 1040 said that the
Okay. But you also testified you were aware of that
25 thereof shall make a return or statement according to the
614
613
forms and regulations prescribed by the secretary.
deals with individuals?
2 A.
Yes, it does say any person made liable shall.
2 A.
3 Q.
And it says shall, right?
3 year.
4 A.
Yes, it does.
4 Q.
5 Q.
5 code for several years, haven't you?
Yes, it says every individual having for the taxable
Okay. And you have known about that section of the
6 A.
Yes, I have.
7 known about that for years?
7 Q.
In the study of the case law, you have read a number of
8 A.
Oh, yes, it is torn out of my book.
8 cases that you told us about. Did you read the case of United
9 Q.
Okay. If you turn to 6012, 6012.
9 States versus Shift where the Second Circuit said --
10 A.
Yes, 6012.
10
11 Q.
Okay. Now, that provides, doesn't it, that returns
11 approach?
6
Now, can you turn to -- and this 611 section, you have
MR. BECRAFT: Your Honor, before we -- may we
12 with respect to income taxes under subtitle A shall be made by
12
THE COURT: You may.
13 the following?
13
14 A.
Yes, that's what it says.
14 bench.)
15 Q.
It goes to list who has got to make the returns.
15
MR. BECRAFT: The prosecution is assuming facts
16 Again, that says shall, doesn't it?
16 in evidence. If the government wants to try to impeach
17 A.
17 her with cases, I think the first thing that must be done
Yes, it says each individual -- let me read this. Yes,
18 it says returns with respect to income taxes under subtitle A
18 is to confirm whether or not the witness has any personal
19 shall be made by the following.
19 information or knowledge about the case that he's going to
20 Q.
Okay. Now -- and it lists who --
20 be examining her on. If the witness says I don't know
21 A.
It lists individuals, it goes on and lists
21 anything about the case, then quoting from it or asking
22 corporations, every estate, be it political organization,
22 further questions about it, there's lack of personal
23 homeowners association, persons under disability, receivers,
23 foundation for the question then.
24 trustees, it goes on for several pages.
24
25 Q.
25 I don't think.
Let's back up a second. The first section you come to
THE COURT: It wouldn't impeach her good faith,
616
615
MR. MURPHY: Well, Judge, I think it would,
is allowed. I'm not saying -- inquiring into it ad
2 because the Shift case is right on point about the
2 nauseam would be inappropriate, because there would have
3 voluntariness of taxes.
3 to be some indication that there was a case that a person
4
MR. BECRAFT: She doesn't know --
4 would have had access to had they made diligent inquiry,
5
MR. BERNHOFT: The question isn't whether her
5 but not necessarily that she --
6 belief is correct about the law.
6
7
7 questions, in your research -- well --
MR. MURPHY: I understand that. The question
MR. MURPHY: Judge, what about the general
8 is, is there a good faith basis for belief, and I think I
8
9 can go into the extent of her --
9 thoroughness of her research.
10
10
MR. MURPHY: I think I can ask her this.
11 thoroughness of the inquiry?
11
THE COURT: And I think you can ask her a few
12
12 questions about a specific case or two, but not ten cases.
THE COURT: You're going to her lack of
MR. MURPHY: Yes, sir. And that that would
THE COURT: You're entitled to examine the
13 result in a lack of good faith.
13
MR. MURPHY: I won't, Judge.
14
THE COURT: What is the case?
14
MR. BECRAFT: How about the substance, Your
15
MR. MURPHY: Judge, I just have a snippet from
15 Honor? It seems like to me, though, if the witness has
16 it, because I was going to do a Power Point, but I ran out
16 not read it, having the government ask a question through
17 of time.
17 its cross and it's a leading question, but to lead off --
18
18
THE COURT: I was just making sure it
THE COURT: I'm going to allow it on this case.
19 preceded -- it was during the period she did the research,
19 I mean the government's argument -- otherwise a person --
20 and I think it is. I think it would be unfair to ask her
20 it's somewhat of a logical inquiry, and I think you can
21 about a case --
21 test a person's logic.
22
22
MR. BECRAFT: The witness doesn't know, is my
MR. MURPHY: Judge, I won't beat the horse to
23 point, Your Honor.
23 death, I think I'm getting near the end. I'm going to ask
24
24 her about the '92 and '93 tax books.
THE COURT: Well, I think that some inquiry as
25 to the thoroughness of one's -- one person's investigation
25
THE COURT: Sure.
618
617
MR. MURPHY: And that's going to be about it.
2
THE COURT: Okay. I'll overrule the objection
didn't?
2 A.
Right. And I may have read excerpts -- many cases I
3 with the limitations that we discussed.
3 had experts from, that I did not actually go to the law
4
4 library and find those specific cases and read entirely
5
5 through them.
6 court.)
6 Q.
7 BY MR. MURPHY:
7 going to put page two up here on the screen.
8 Q.
8 A.
I can see.
9 come across the case of United States versus Shift at 876
9 Q.
Can you see it?
10 F.2d, 272, a 1989 decision, Second Circuit where they said to
10 A.
Yes, I can.
11 the extent that income taxes are said to be voluntary,
11 Q.
That says in -- and this is from the instructions, the
12 however, they're only voluntary in that one files the returns
12 code provides for penalties for failure to file a return,
13 and pays the taxes without the IRS first telling each
13 failure to supply information required by law or regulations,
14 individual the amount due and then forces the payment of that
14 failure to furnish specific information required on return
15 amount. The payment of income tax is not optional. Did you
15 forms or for furnishing fraudulent information. Other effects
16 run across that opinion?
16 of not providing all or part of the requested information may
17 A.
17 include the disallowance of claimed exemptions, exclusion
Ms. Kuglin, during the course of your research, did you
I don't recall running across -- there were many, many
Now, one of your exhibits was Exhibit 36. And I'm
18 cases I brought into court with me, the ones that I felt were
18 credits, deductions or adjustments resulting from an increased
19 the most descriptive of my thought process, and I know that
19 tax liability, the loss of social security credits, loss or
20 there are contradicting cases all through the judicial system.
20 delaying the issuance of a refund for overpayment, interest
21 Q.
Okay. So the answer is --
21 and penalty charges, unpaid taxes or other disadvantages to
22 A.
That is not one of the cases that I chose to bring into
22 the taxpayer. Now, this is some of the language in this
23 the court. I may or may not have read it at some point in
23 notice that you claim you relied on in including that you
24 time, I can't confirm on that.
24 weren't required to file taxes, correct?
25 Q.
25 A.
So you could have read it, maybe you did, maybe you
Yes, that part that you just read does say there are
620
619
penalties for persons required by the law or regulations.
A.
2 Q.
2 Q.
Okay. And this is a government publication?
3 on in arriving to the conclusion that you didn't have to pay
3 A.
Yes, it is.
4 taxes?
4 Q.
Okay. And the 1992 1040 was one of the documents that
5 A.
5 you relied on in arriving at your conclusion, correct, that
Okay. But this is -- this is part of what you relied
Yes, Section 6001 and 6011 of the beginning of that
Yes, 1992 Form 1040.
6 paragraph -- those paragraphs.
6 you didn't have to file taxes?
7 Q.
But what I'm saying is this document right here --
7 A.
I believe I did file a 1992.
8 A.
Yes.
8 Q.
Okay. You filed -- well, let me ask you this: Let me
9 Q.
-- that you claim that says -- makes the payment of
9 back up a second. I may have something wrong here. I think I
10 taxes voluntary, it also talks about penalties if you don't
10 got the right one now.
11 pay. You relied on that in formulating your conclusion?
11 A.
All right.
12 A.
12 Q.
Okay. What is this?
13 relied on it to say that it was voluntary. I did not.
13 A.
This is -- should be a 19 -- well, there's no date.
14 Q.
Ma'am, is the answer yes or no?
14 1993, yes, it's big letters, 1993 1040 form.
15 A.
Well, your question is wrong, Mr. Murphy.
15 Q.
16 Q.
Well, did you rely on the information in this?
16 in making your conclusion or arriving at your conclusion that
17 A.
I relied on the information that is written there. I
17 you didn't have to file returns or pay taxes?
I need to correct your sentence there. You said that I
Now, this is one of the publications that you relied on
18 did not rely on that information to determine whether or not
18 A.
19 the tax was voluntary or not.
19 instructions to determine if I was a person referred to in
20 Q.
20 6001 and 6011, yes, sir.
Okay. But -- so you did rely on this information, you
I relied on the Privacy and Paperwork Reduction Act
21 read it?
21 Q.
So you relied --
22 A.
Yes, yes, I did.
22 A.
On the information in that document, yes.
23 Q.
Okay. I stand corrected on it.
23
24 A.
Thank you.
24 as the next numbered exhibit?
25 Q.
Now, do you recognize this document?
25
MR. MURPHY: Judge, could we have this marked
THE COURT: 47 -- 57. 57, excuse me.
622
621
gross income, and the highlighted portion says $6,050.
2 1993 Instructions.)
2 Q.
3
MR. MURPHY: Judge, was that 57?
3 talked about, right?
4
MR. BECRAFT: Your Honor, I have 57.
4 A.
Right, it says chart A for most people.
5 Q.
Okay. And it says use chart A on this page to see if
5 Q.
Okay. Ma'am, I am going to -- I'm going to put a
Okay. And it also says use -- this is chart A we just
6 passage up there. This is from page four. Would you agree
6 you must file a return?
7 that it says if you do not file a return, do not provide the
7 A.
8 information we ask for or provide fraudulent information, the
8 if you must file a return.
9 law says that you may be charged penalties; in certain cases,
9 Q.
Okay. Okay. And I'm putting up page 15.
10 you may be subject to criminal prosecution?
10 A.
All right.
11 A.
That is what it says.
11 Q.
Okay. Would you read the highlighted language on page
12 Q.
Okay. And, in fact, that's the same page that talks
12 15?
That's right, it says use chart A on this paper to see
13 about the Paperwork Reduction Act, isn't it?
13 A.
The highlighted language, it says -- it's under wages
14 A.
That is correct.
14 salaries, tips, et cetera. Show the total of all wages,
15 Q.
Now, I'm going to show you page seven of that same
15 salaries, fees, commissions, tips, bonuses, supplemental
16 document, and this is a page that's entitled Do I Have to
16 unemployment benefits and other amounts you were paid before
17 File?
17 taxes, insurance, et cetera, or taken out for a joint return.
18 A.
Yes, that's what it says.
18 Be sure to include your spouse's income on line seven.
19 Q.
Okay. And there's a little chart, and what does the
19 Q.
Okay. And it goes on to say, included in this total,
20 highlighted language say?
20 the amount that would -- that should be shown in box one on
21 A.
21 W-2, report all wages, salaries and tips you have received
It says single, including divorced and legally
22 separated. It says filing -- I'm sorry, it says marital
22 even if you do not have a Form W-2.
23 status; single (including divorced and legally separated;
23 A.
That is what the form says.
24 second column is filing status, single head of household; age,
24 Q.
Okay. Now, referring to page 36, there's language
25 under 65, 65 or older, under 65, 65 or older; and then it says
25 there, would you read the highlighted language?
624
623
A.
Yes. The first highlight says because you take a
response is mandatory under these sections. Now, that's what
2 frivolous position, and the other highlight says other
2 that section says, correct?
3 penalties can be imposed for negligence, substantial
3 A.
That is absolutely correct.
4 understatement of tax and fraud, criminal penalties may be
4 Q.
Okay. And it also goes on in the underlying language
5 imposed for willful failure to file, tax evasion or making a
5 to say if you do not file a return, do not provide the
6 false statement.
6 information that we asked for or to provide fraudulent
7 Q.
7 information, you may be charged penalties and be subject to
Okay. And that's all information that was in this 1993
8 1040, part of which you relied upon in arriving at your
8 criminal prosecution?
9 conclusion that you didn't have to file a tax return and pay
9 A.
That is correct, that's what it says.
10 taxes?
10 Q.
Now, I'm going over to Section 2, if you would look at
11 A.
11 page eight, ma'am. I'm going to put it up here, but --
That is correct, that was information that I relied on
12 to determine if I was a person liable, yes.
12 A.
Page eight? I have page eight.
13 Q.
13 Q.
Under Do I have To File?
14 that document?
14 A.
Yes.
15 A.
That's a 1995 Form 1040.
15 Q.
It says use chart A, B or C to see if you must file a
16 Q.
Okay. Now, did you have a '95 1040 booklet like this?
16 return?
17 A.
I believe so. Let me double check. Yes, 1995.
17 A.
That's correct.
18 Q.
Okay. And I believe you testified you used this
18 Q.
Okay. And if you go over here to chart A, it indicates
Okay. Now, the document that I'm handing you, what is
19 booklet in aiding your testimony, correct?
19 you must file a return if your gross income for single,
20 A.
Yes.
20 including divorced or separated if your gross income was
21 Q.
Okay. Now, if you look at what I have got up there,
21 $6400, correct, if you're under 65?
22 that first full paragraph, our legal right to ask you for
22 A.
That is correct, that is what it says.
23 information is Internal Revenue Code Section 6001, 6011 and
23 Q.
Okay. And turning to page 35, there's also a provision
24 6012A under regulations, they say that you must file a return
24 on page 35 that provides other penalties can be imposed for
25 or statement with us for any tax you are liable for. Your
25 negligence, substantial understatement of tax, and fraud.
626
625
MR. MURPHY: Judge, if I could have one second
Criminal penalties may be imposed for willful failure to file,
2 tax evasion or making a false statement, correct?
2 to look at my notes.
3 A.
3
I would like to see what the top -- what the top of
THE COURT: Sure.
4 that page is.
4 Q.
Ms. Kuglin?
5 Q.
Sure.
5 A.
Yes, sir.
6 A.
I'm looking for page 35 right now. All right. This is
6 Q.
Now, you have not filed a refund for all these taxes
7 under the section for general information, and it says other
7 you have paid all over the years, have you?
8 penalties --
8 A.
Since 1993, that's correct.
9 Q.
9 Q.
Okay. And your general practice is on the day you get
Well, this is under the section of interest and
10 penalties.
10 paid, you go down to the bank and you take out large amounts
11 A.
11 of cash that same day or the next day, correct?
Interest and penalties, yes, I was looking at the
12 general session, which starts -- this section starts on the
12 A.
13 previous page. Under interest and penalties, yes, that is
13 is, whether I'm going to be in town for awhile and what funds
14 what it says.
14 I'm required to pay of my general bills which are not
15 Q.
15 automatically deducted, yes, sir.
And this is one of the books -- is this one of the
It depends. It depends upon what my flying schedule
16 publications that you used in determining that you didn't have
16 Q.
But if you look at the bank records --
17 to pay taxes?
17 A.
Yes.
18 A.
18 Q.
-- there's several big withdrawals like four, five, six
This is one of the documents I used. I determined
19 whether or not I had a liability -- whether I was liable or
19 thousand dollars the day after you got paid?
20 had been made liable, yes, sir.
20 A.
21
21
That's correct, yes.
MR. MURPHY: I don't have any further
22 marked as an exhibit.
23
23
24
24
MR. BECRAFT: Can the witness be handed
25 1995 1040 Instructions.)
25 Exhibits 48 and 54 and 57 and 58?
REDIRECT - VERNICE KUGLIN
628
627
THE WITNESS: Would you like Exhibit 28 back?
was -- earlier in the instructions, it said, I believe, if I
2
THE CLERK: I'll get it when I come up there.
2 felt that I file exempt, that I would then fill out
3
MR. BECRAFT: Can I help her, Your Honor?
3 sections -- Section 7. Section 7 says I claim exemption from
4
THE COURT: Sure.
4 a holding for 1995, that I certify that I meet both of the
5
THE WITNESS: Which one was that, Mr. Becraft?
5 following conditions or exemptions. Last year, I had a right
6
MR. BECRAFT: 28 through 54.
6 to a refund of all federal income tax withheld because I had
7
THE CLERK: There's 48 through 54.
7 no tax liability; and this year, I expect a refund of all
8
MR. BECRAFT: May I also get Exhibit 15, Your
8 federal income tax withheld because I expect to have no tax
9 liability. And the fact that based on --
9 Honor?
10
THE CLERK: It's probably in that other stack
10 Q.
Can I point out here? Watch on the screen what you
11 in numerical order.
11 just read, see where that pen is?
12
12 A.
Yes.
13 BY MR. BECRAFT:
13 Q.
On Government Exhibit -- I mean on Exhibit Number 17
14 Q.
14 down here at the bottom, it says 17.
Ms. Kuglin, I want to ask you some questions about the
15 W-4 forms that you submitted to FedEx, if I can.
15 A.
Yes.
16 A.
Yes, sir.
16 Q.
I am now pointing with the pen to number seven, which
17 Q.
The first one you submitted was in December of '95, is
17 is about an inch below the --
18 that correct?
18 A.
19 A.
That's correct, December the 30th, I believe.
19 Q.
And you relied upon your ability to file exempt because
20 Q.
I'm going to flip it down here on the Elmo, and I want
20 the form said --
21 you to tell me what was it on this form that you thought
21
22 was -- that you read that related to it being permissible for
22 leading.
23 you to claim exempt. Can you kind of see?
23
24 A.
24 Q.
Is this what you relied upon?
25 A.
Yes, I did.
Yeah, if you move the form just slighted to your left.
25 A little bit more. Five, six and seven. Yes. Actually, it
THE COURT: Objection sustained, it is leading.
630
629
Q.
The language you just read?
Q.
Now, was there something on this particular form that
2 A.
Yes.
2 you can direct our attention that allowed you to claim exempt?
3 Q.
Now, all these other Form W-4s, did they have the same
3 A.
Yes, if you will move the form just slightly to your
4 language? I'm going to go down on the screen here to Exhibit
4 left under number seven, it says I claim exemption from
5 15, you see that? I'm going to move what I think is a spot
5 withholding for 1998, and I certify that I meet both of the
6 that would be similar.
6 following conditions. And would you like me to read those
7 A.
This is a 1998 form?
7 conditions?
8 Q.
I'll show you, it says 1998.
8 Q.
First, is my pen pointed at the right spot?
9 A.
Right, 1988.
9 A.
Yes, it is, that is correct.
10 Q.
And this has a series of forms W-4 in it. Now, is
10 Q.
Could I get to you read that line?
11 there the same language that appears on this one that's in
11 A.
Yes. Last year, I had a right to a refund of all
12 1988?
12 federal income tax withheld because I had no tax liability;
13 A.
13 and this year, I expect refund of all federal income tax
Under 6B, it says: I claim exemption from withholding
14 because, and then A says last year I did not owe any federal
14 withheld because I expect to have no tax liability.
15 income tax and had a right to refund of all income tax
15 Q.
16 withheld; and this year, I do not expect to owe any federal
16 I'm going to show to you a W-4 form for, I guess, 1998, is
17 income tax and expect to have a right to a refund on income
17 that correct?
18 tax withheld. Yes, that's the same language.
18 A.
19 Q.
19 Q.
Your signature appears down there on the bottom?
20 we have also in one that I believe you testified on direct
20 A.
Right.
21 that this was the '97 one?
21 Q.
I'm going to kind of move around on the screen and see
22 A.
Yes, '96 is crossed out and 1997 is written in.
22 if my pen goes to the spot where you think it is important?
23 Q.
And on the screen, it doesn't look too good, but is
23 A.
That is correct, number seven.
24 that a date of January 1?
24 Q.
And is this what are you relied upon in claiming
25 A.
25 exemption?
Now, let me just quickly -- in this particular exhibit,
I believe that's January 1, 1997.
I flipped to the next page in Exhibit Number 17, and
632
631
A.
Yes, I did.
2 Q.
Were these words important where I'm flashing my pen
the individual income tax, and I could find no law that
2 required me as such to complete the 1040 form.
3 right now, because I had no tax liability?
3 Q.
Ms. Kuglin, I would like to ask you some questions
4 A.
Yes, those were the most important words in those two.
4 about that November of 1995 letter that you wrote to the IRS,
5 Q.
I'm going to put my pen on, I think, the line of the
5 do you remember that?
6 form that was important for you, is that correct?
6 A.
I remember that, yes.
7 A.
7 Q.
Can I ask you some broad general questions about it
That is correct, line number seven, and the words which
8 were essential where I had no tax liability, and I expect to
8 without digging out the exhibit?
9 have no tax liability.
9 A.
10 Q.
10
11 this one for 2000?
11
THE COURT: Yes.
12 A.
12
Correct me if I'm wrong, the same language appears for
That's correct, number seven, I had no tax liability
Yes.
13 and I expect to have no tax liability.
13 bench.)
14 Q.
Okay. Now, 2001, same language?
14
15 A.
Yes, dated February the 10th of 2000, same language,
15 that. Defense counsel is going outside the scope of
16 number seven, I claim exemption because I had no tax liability
16 direct. I didn't -- cross, I didn't ask about that
17 and expect to have no tax liability.
17 letter.
18 Q.
18
Ms. Kuglin, what is it about being liable that is
THE COURT: I don't think he asked about that
19 important to you?
19 the '95 letter.
20 A.
20
The instructions on the 1040 form say that Section 6001
MR. BECRAFT: Okay. All right. Good enough,
21 and 6011 are the sections that I should rely upon to determine
21 Your Honor.
22 whether or not I am liable for the individual income tax
22
23 and -- or whether I have been made liable. And I found in
23
24 reviewing those sections and other sections of the code, I
24 court.)
25 could not find any section of the code that made me liable for
25 Q.
Ms. Kuglin, do you have in front of you Exhibits 48 and
634
633
Q.
54?
Let me stop you right there.
2 A.
I have 48 and I have 54.
2 A.
Yes.
3 Q.
Okay. Have you seen them before, that series of
3 Q.
You were directed to do what by whom?
4 letters?
4
MR. MURPHY: Judge, I'm -- it's irrelevant.
5 A.
Yes I have.
5 It's hearsay and it's irrelevant.
6 Q.
Can I ask general questions without going to a specific
6
THE COURT: It is hearsay.
7 exhibit?
7
MR. BECRAFT: Okay, I will move on, Judge.
8 A.
Yes.
8 A.
9 Q.
What's the first letter dated there, 48, I believe?
9 that I had not gotten answers to my specific questions, I had
10 A.
This is a letter from the IRS.
10 made a decision to hire --
11 Q.
To you?
11
12 A.
To me, dated October 31st, '95.
12 object to the relevance of this.
13 Q.
Did you at any time after that date in reference to
13
All right. I -- due to certain circumstances, the fact
MR. MURPHY: Judge, objection, I'm going to
THE COURT: Let's talk about it. I need to
14 these letters that you were getting from the Internal Revenue
14 check one thing.
15 Service that are there in front of you, Exhibits 48 through
15
16 54, did you make any effort to seek legal counsel?
16 bench.)
17 A.
17
Absolutely, I did. This number three on this form
THE COURT: She is not asserting she relied on
18 dated October 31st says if you're not required to file, please
18 the advice of attorney.
19 explain why. And I had written the letter -- the November
19
20 letters asking the questions, explaining my -- the information
20 got Exhibits 48 through 54. She sought counsel and turned
21 that I had obtained and asked for a response. When I did not
21 the matter over to counsel, that's -- and that's the point
22 get a response, I had an opportunity to go to the IRS and
22 I want her to make. Not what counsel said, I'm not going
23 speak with an agent to get some response, and did not; and
23 to -- I'm not offering any --
24 then later I decided that it was time to -- I was actually
24
25 directed to go to a law library or hire an attorney.
25 matter. The reason those letters come is they give her
MR. BECRAFT: No, my whole point, Judge, is she
MR. MURPHY: Judge, I think that it doesn't
636
635
MR. MURPHY: That is not what they're relying
notice, and I can argue they gave her notice of the
2 requirement that she pay her income tax.
2 on.
3
3
MR. BECRAFT: And we can show the context in
MR. BECRAFT: It kind of ties back into those
4 which the letters are sent to her, her response, which
4 other exhibits. You know, some of these letters will be
5 would include her turning the letters over to an attorney.
5 responsive. These letters offered here provoke the
6
6 response from the lawyers that are these other letters
THE COURT: She doesn't have any -- it's a
7 little confusing, though, because if she turned them over
7 that we have excluded, Your Honor.
8 to a lawyer and the lawyer said on my advice you shouldn't
8
9 do anything, then she can assert that and rely on it. We
9 in the case that I can -- somebody -- somebody can explain
10 might have a lawyer here, but she can assert that, but she
10 it so I will understand what it is, but I don't perceive
11 didn't do that. I'm a little confused about how --
11 it as being a relevant issue in the case, because she
12
12 didn't do anything in response to the lawyers. I mean if
MR. BECRAFT: The only point I want to elicit
THE COURT: Well, it's not relevant to an issue
13 is she is unfamiliar with administrative procedures, she
13 she sent them to her CPA, then took no action because she
14 started receiving letters, she sought counsel and turned
14 was awaiting a response from the CPA, I think you could
15 these matters over to her counsel and just leave it at
15 maybe show that we gave it to them and got no response. I
16 that.
16 am confused about how --
17
THE COURT: What -- Mr. Murphy, how does that
MR. BECRAFT: I think to address this question
18 of the government arguing closing, Your Honor, that they
18 work?
19
17
MR. MURPHY: Judge, I think it is irrelevant.
19 were sent these letters --
20 I think the letters are significant for this reason: She
20
THE COURT: Right.
21 got notice that -- of the tax -- that she owed taxes and
21
MR. BECRAFT: -- and they went to her.
22 taxes were due and owing during the period that she didn't
22
THE COURT: Right.
23 file. I don't think that the fact that she hired an
23
MR. BECRAFT: And she was silent. In response,
24 attorney has any relevance to the case.
24 I think the defense can say, well, she received those
25
25 letters and at least turned them over -- sought counsel
THE COURT: Well, it would if she had --
638
637
and turned them over to counsel. To directly address what
appropriate question. If it turns out that's the only
2 I see is coming up in closing argument --
2 thing, Mr. Murphy's motion to strike will probably --
3
3 let's try it.
THE COURT: Turned them over to counsel, for
4 what purpose?
4
5
MR. BECRAFT: Sought advice about what to do.
5 court.)
6
THE COURT: She has never said she had gotten
6 BY MR. BECRAFT:
7 Q.
7 any -8
MR. BECRAFT: We haven't got to the point of
Ms. Kuglin, in response to those letters that you
8 received from the IRS, let's talk about them collectively, 48
9 turning it over to counsel.
9 through 54.
10
10 A.
All right.
11 ask the question, but then depending on how we go, it may
11 Q.
Did you seek or -- let me ask you this: Are you
12 end up that Mr. Murphy has a motion to strike. I'm just
12 familiar with or what familiarity do you have with
13 not sure -- I don't want to cut off -- if she has got
13 administrative procedures regarding federal income taxes?
14 something meaningful to say on this point, I want her to
14 A.
15 get a chance to do it.
15 need to be followed. I am familiar, and I can't quote again,
16
16 I don't have the documents up here, that I have a right to ask
THE COURT: Okay. Okay. I'm going to let you
MR. BECRAFT: But there's no legal opinion
I'm familiar that there are special procedures that
17 given by lawyers that directly relate to this, Judge.
17 questions, I have the right to seek counsel and I have a right
18 It's the mere fact that they were turned over to counsel.
18 to have hearings, and that there's specific procedures that
19
19 must be adhered to.
THE COURT: Well, I think that's pretty
20 tenuous, but I think I ought to let her answer the
20 Q.
Did you have -- in your studies, have you sat down and
21 question and see what else -- you said that was stuff that
21 studied the point of what you should do if you get letters
22 you needed to take, and then you had some other stuff that
22 from the IRS?
23 you were going to take. Well, if there is another step
23 A.
24 that follows that makes it relevant or just a preparatory
24 certain period of time and --
25 question or preliminary question, then it is an
25 Q.
The -- the letters needed to be responded to within a
Listen to my question.
640
639
A.
MR. BECRAFT: I will back off, Your Honor.
Yes, sir.
2 Q.
Have you studied -- you have told us at length what you
2
3 have done in reference to the study --
3 A.
I'm just not quite sure what I'm allowed to answer and
4 A.
Right.
4 what I'm not allowed to --
5 Q.
-- the substantive tax law itself, my question that is
5 Q.
There's no question pending, don't worry about it.
6 now pending is on a different matter, but it relates to taxes.
6
THE COURT: Right.
7 Had you engaged in any type of a study regarding
7 Q.
8 administrative procedures in dealing with the IRS?
8 Murphy pointed out a couple of cases to you where maybe some
9 A.
I know I have. I know I have. I'm not --
9 of your issues have been raised by other parties, do you
10 Q.
Okay. That's fine. Have you studied it in detail so
10 recall that?
Ms. Kuglin, in your studies of the income tax, Mr.
11 you would comfortable enough --
11 A.
Yes.
12 A.
12 Q.
He mentioned this Wunder case.
13 to respond, do the legal responses that I felt that these
13 A.
Yes.
14 letters were requiring.
14 Q.
Have you ever heard of Wunder?
15 Q.
And did --
15 A.
I don't believe that I have heard of Wunder.
16 A.
And so as a result of that, I felt that since I was not
16 Q.
And have you engaged in any type of a study down at the
I have read it over. I did not feel that I knew enough
17 getting responses to the letters I had written that perhaps
17 law library or on any other occasion? I want to find out if
18 they were not in the proper format and that if I hired legal
18 there are other cases that may relate to the ones that I
19 counsel, someone to write the letters for me, that the -- all
19 believe in?
20 the intricacies that were required would be in those letters,
20 A.
21 and I wanted to make sure I had someone who was asking the
21 I have read. There's merchants -- some of the documents
22 same questions that I had been asking.
22 explain the cases, if I might look at the documents.
23 Q.
23 Q.
Okay.
24 A.
There are cases like Isner versus McCulmer Merchants
24
To your knowledge, did your counsel offer any -MR. MURPHY: Judge, we're now at a point that
25 it's not relevant.
Well, I can probably -- I have got a list of cases that
25 Loan and Trust that address these same issues that we have
642
641
been talking about.
personally read that I didn't know -- I had read quotes from
2
2 the cases and I looked at these cases, the ones that I felt
3 response. It's --
3 would answer some of the questions that I had.
4
THE COURT: I think it's --
4 Q.
Okay. Listen to my question.
5
MR. BECRAFT: Let me back up.
5 A.
Yes, sir.
6
THE COURT: It's nonresponsive.
6 Q.
When you wanted to read a case and when you wanted to
7
MR. BECRAFT: Your Honor, I will back up and
7 go get it, did you find out about the case in some materials,
8 ask another question.
8 explanatory materials that you were reading? For example,
9
9 pull out that folder one to Claire Kelly.
THE COURT: I think we need to ask a question
10 that can be responded to.
10 A.
Yes.
11 Q.
11 Q.
Would the Claire Kelly article be similar to other
Cases that were brought to your attention were brought
12 to your attention in some particular way, is that correct?
12 articles that you would read?
13 A.
That's correct.
13 A.
Yes.
14 Q.
Would you have cases brought to your attention by the
14 Q.
Did these articles that you read mention court cases?
15 various materials that you would read?
15 A.
Yes, it did mention court cases.
16 A.
Yes, I did.
16 Q.
What, if any, effort did you make once you saw a case
17 Q.
Okay. And if you saw a case in the materials that you
17 in such material as such, what effort would you make to try to
18 read, would you go down and try to locate the case and read
18 read the case?
19 it?
19 A.
I would go down and read the case and copy the case.
Okay. Now, for cases -- there are obviously cases that
20 A.
Yes, I did. That's what I did.
20 Q.
21 Q.
Did you make any effort to go to try to find cases that
21 were not mentioned in your reading material.
22 you didn't know anything about?
22 A.
There were cases that were mentioned in the cases
23 A.
Yes, I did.
23 themselves that I would go back and look at some of those
24 Q.
About cases that you did not know anything about?
24 cases which substantiates some of the arguments in those
25 A.
No, these were cases that I had -- that I had not
25 cases.
644
643
Q.
But you wouldn't -- if there was some case --
2
MR. MURPHY: Judge, I'm going to object to him
we don't let them do that, because we want to actually
2 have a real answer. So I'm going to have to sustain that.
3 leading.
3 I explain a little bit to the jury so we all understand
4
4 that we need to avoid that.
5 Q.
THE COURT: Yes, objection sustained.
In reference to this case that Mr. Murphy asked you
5 Q.
What, if any, cases adverse to your position was
6 about, the Wunder case, had cases like that ever been brought
6 brought to your attention?
7 to your attention by your reading material?
7 A.
8 A.
I don't know that specifically the Wunder case had.
8 my position.
9 Q.
Okay. Would you know about the existence of any other
9 Q.
In what way?
10 cases other than what you would discover in your reading
10 A.
In the fact that it determined that an income tax was a
11 materials?
11 direct tax rather than an excise size tax.
12 A.
12 Q.
I would hear about cases when I went to seminars and
Well, the Pollock case, for one thing, was adverse to
What, if any, other cases were brought to your
13 people who talked about the different cases.
13 attention that indicated to you that your beliefs were
14 Q.
Now, looking at this from the totality.
14 erroneous?
15 A.
Yes.
15 A.
Let me think on that one just a little bit.
16 Q.
Were there any cases that you had learned about through
16 Q.
Let me withdraw it and I will frame it a different way.
17 this way that you were pursuing in reference to studying that
17 A.
All right.
18 gave you any indication that what you were reading and
18 Q.
Did you ever learn about any cases that might have
19 studying was wrong?
19 dealt with your issues that you talked about here in court
20
20 over the last day and a half?
21 leading.
21 A.
22 A.
22 point of the questions.
23
No.
THE COURT: I think it is simply too suggestive
23 Q.
I don't know if I'm just tired or if I'm missing the
Let me frame it another way. In your studies, in what
24 of the answer. A leading question is one that suggests an
24 you read, what, if any, cases did you find that rejected your
25 answer, and kind of like pitching somebody a softball, and
25 arguments? Did you find any?
646
645
A.
No. I found quotes in cases that I read that discussed
don't have that regulation sitting right in front of me.
2 other cases and differing opinions, but there were always
2 Q.
Let me ask you this question: Can you turn to Section
3 answers to those opinions explained in the cases given down
3 1 of the Internal Revenue Code?
4 by -- you know, the decisions given down by the judges in
4 A.
Yes, I can.
5 those cases.
5 Q.
You were asked questions about tax imposed.
6 Q.
All right. Good enough.
6 A.
Yes.
7 A.
So they questioned it, but they also gave an
7 Q.
In reference to corresponding regulations, do you know
8 explanation as to why those were not valid.
8 what regulation corresponds to Section 1 of the code?
9 Q.
9 A.
Mr. Murphy, during cross, brought to your attention
That is CFR -- 26 CFR 1 --
10 this big thick book that we have had here this afternoon, the
10
MR. MURPHY: Judge, I'm going to object because
11 Code of Federal Regulations.
11 I'm not sure what he means by corresponds because I don't
12 A.
Yes.
12 know that there's a corresponding relationship,
13 Q.
Have you seen that type of book before?
13 necessarily.
14 A.
Yes, I have.
14
15 Q.
Whereabouts?
15 question on this one.
16 A.
The Code of Federal -- excuse me, it's in the library.
16 Q.
17 Q.
Now, he directed your attention to a particular
17 code to your understanding?
THE COURT: Well, I'm going to allow the
Is there a regulation that applies to Section 1 of the
18 regulation, is that correct?
18 A.
Yes, there's regulation 1.1-1.
19 A.
That's correct.
19 Q.
Have you read that regulation before?
20 Q.
1.6012-1, correct?
20 A.
I have read parts of that regulation before. I don't
21 A.
That's correct.
21 know that I have read the entire thing.
22 Q.
And you testified that you have seen that before?
22 Q.
23 A.
Yes.
23 understanding did you have as to whether or not that
24 Q.
Why does that regulation in your view not apply to you?
24 particular regulation solicited information?
25 A.
Let me go to the regulations or to the code, and I
25
Now, did you come to any understanding or what, if any,
Okay. I'll ask another question. Mr. Murphy brought
648
647
to your attention that the Form 1040 instruction booklet has
section, under the Paperwork Reduction Act.
2 an OMB control number?
2 Q.
3 A.
Yes.
3 6001, 6011 and Section 6012 of the Internal Revenue Code?
4 Q.
1040 form has an OMB control number, right?
4 A.
5 A.
Yes.
5 Q.
And you had read those sections of the Internal Revenue
6 Q.
Have you looked through, I don't know the exhibit
6 Code a long ago?
Now, Mr. Murphy asked you some questions about Section
7 number, but we have offered it into evidence, that big long
7 A.
Yes, I read it during the period of time I was
8 list of all these control numbers?
8 formulating my opinions.
9 A.
Yes, the control numbers that are in Section 602.
9 Q.
10 Q.
And in that particular list of OMB control numbers --
10 6001 of the Internal Revenue Code, what was it that was
11 A.
Yes.
11 important in that section of the code that related to your
12 Q.
-- did you see when you first started engaging in this
12 beliefs about whether or not you were required to file
What was it that was important -- when you read Section
13 study that there were a lot of other regulations that listed
13 returns?
14 the same control number for Form 1040?
14 A.
15 A.
Yes, yes, I did. There was a large number of them.
15 liable for any tax imposed by this title.
16 Q.
Okay. Out of that list of OMB control numbers, what
16 Q.
It said that a person that was liable, any person
Did you determine whether or not you were liable
17 was it that was so important for you about how the 1040 form
17 pursuant to Section 61 -- or Section 6001.
18 was to be or what relationship it had with the actual
18 A.
19 regulations themselves?
19 I read 6011, which said a person made liable, and when that
20 A.
20 did not define whether or not I was a person made liable, I
Well, the -- knowing that the individual income tax
I could not determine by just reading that, that I was.
21 regulation is regulation 1.1-1 on that index, there was
21 then went to the index to determine whether or not there was
22 only -- only one entry that applied to that particular
22 any section under subtitle A, taxes, which addressed the issue
23 regulation, and that one entry was the entry 1545-0067 which
23 of liability, and that's when I found the Section 1461, which
24 applied to the Form 2555, foreign earned income. And that was
24 said that the withholding agent for nonresident aliens and
25 of significance to me of that particular index and that
25 foreign corporations were made liable for the individual
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income tax.
Q.
2 Q.
2 to people who are liable?
Have you -- what, if any, research about looking for
Is it your understanding that section 6012 would apply
3 the word liable in subtitle A of the Internal Revenue Code
3 A.
4 beyond the table of contents or the index, have you engaged in
4 agents of nonresident aliens and foreign corporations are
5 any type of search to find the word liable in subtitle A?
5 absolutely liable and have a requirement to complete the 1040
6 A.
6 form and also the Form 2555.
Yes, later on when computers became available and this
Absolutely. I believe that foreign -- the withholding
7 information was on the computers, I did search under subtitle
7 Q.
8 A, individual income tax for the word liable, and it came up,
8 that '93 1040 instruction booklet or '95 that you had up here
9 I think, three times, one -- two times were in reference to
9 on the stand with you?
10 some dispute, and the only other time it came up was in regard
10 A.
Yes, I do.
11 to Section 1461 of subtitle A.
11 Q.
Okay. I was going to use these exhibits, but can you
12 Q.
12 use those, that one?
Mr. Murphy directed your attention to Section 6012 of
Let me ask one final set of questions. Do you have
13 the Internal Revenue Code?
13 A.
Yes, I can.
14 A.
Yes.
14 Q.
All right. Have you looked through there to see --
15 Q.
Do you have a belief -- or what, if any, belief do you
15 your testimony is that you're an American citizen?
16 have as to whether or not you are required pursuant to Section
16 A.
That is correct.
17 6012 to file 1040 forms?
17 Q.
All right. Did you make any study of that instruction
18 A.
18 booklet to determine how often the instruction booklet relates
Well, based on the fact that I could only find one
19 section, 1461, in the entire section of individual income tax
19 to United States citizens?
20 that addressed anybody that was liable, and that was the
20 A.
21 withholding agent of foreign corporations or nonresident
21 the Internal Revenue Code, that it is good to go to the index,
22 aliens. Yes, nonresident aliens and foreign corporations.
22 so I went to the index instructions of the 1040 form, and I
23 Since I did not fall under that category, then I made the
23 looked for the word citizen in that document, and I finally
24 determination that I was not a person that was required under
24 found one place where it was listed.
25 Section 6001, 6011 to complete the 1040 form.
25 Q.
Yes, actually, I did, and I, again, as I found out with
What was listed?
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A.
Where the word citizen was listed.
the case among yourselves, don't let anybody talk with
2 Q.
Okay. And what was that?
2 you. We will see you in 15 minutes.
3 A.
And that was listed under the use, it says U. S.
3
4 citizens and resident aliens living abroad, and that was the
4
THE COURT: We will let you have a seat, and
5 only place that I could find any reference to the word
5 we're going to go over a few things.
6 citizen.
6
7
7 something real quick for the record?
MR. BECRAFT: One moment, Your Honor. Nothing
MR. BECRAFT: Your Honor, could I -- could I do
8 further, Your Honor.
8
THE COURT: Sure.
9
9
MR. BECRAFT: Could I renew my Rule 29 motion
THE COURT: All right. Thanks very much. We
10 will let you step down. Thank you.
10 on the same grounds?
11
11
(Witness excused.)
THE COURT: This is a case in which there is --
12
MR. BECRAFT: We rest.
12 the rule simply doesn't contemplate the court making any
13
THE COURT: All right. The defense rests.
13 decisions about really any of the issues that are before
14
Will the government -- and we're going to take
14 this jury. The jury is going to have to decide
15 a break, but, Mr. Murphy, does the government anticipate
15 credibility questions and, therefore, there is sufficient
16 calling any rebuttal witnesses?
16 evidence for the government to proceed on each element of
17
17 the asserted offense.
18
THE COURT: Ladies and gentlemen, that does
18
What we have handed out to -- so motion is
19 conclude all the proof in the case. I'm going to talk
19 denied. We have handed out to you a set of instructions.
20 with counsel and see if we have got our -- I know we have
20 Mr. Murphy, there is -- you both will note that there's
21 been working on the instructions, we hope we're very
21 one that I haven't really quite -- they have got some
22 close, but that will take at least 15 minutes. This is
22 overlap, I may give both of them, it may be okay to do
23 our afternoon break, 15 minutes. If we can't get
23 that. You have got a cover sheet, and it runs quickly
24 everything done today, then, of course, we will revise our
24 through some of the things that are very basic. I will
25 schedule. We will see you in 15 minutes. Don't discuss
25 flip through the pages with you. They're not numbered
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because there's going to be rearranged.
those witnesses with the same type of inquiry that they
2
2 would anybody else. The reference to the indictment and
It begins with the general instruction, they're
3 to decide the case and they're not to -- they're to follow
3 the reading of the indictment, and the reference to 59.1,
4 the law, decide it based on the testimony of other
4 which is the Sand instruction, which is the very brief
5 evidence, the first two pages. And then the burden of
5 statement regarding evade or attempt to defeat any tax.
6 proof and reasonable doubt and what proof beyond a
6 Statutory purpose, which is 59-2.
7 reasonable doubt is. Talking about the evidence and what
7
8 they can consider, direct evidence and circumstantial
8 elements contained in the defendant's Devitt reference
9 evidence. Also, reference that they can't take anything I
9 with the Sand one, and also with Mr. Murphy's statement,
10 have said -- I haven't said much, can't take anything I've
10 and really it seems to be everybody's statement that I'm
11 said as indicating as to how the case should be resolved.
11 going to have to describe what an affirmative act is a
12
12 little more, and I have done that later on, and I've
Multiple crimes, that's 2.01A, that is
The elements, I combined the concept of the
13 requested. Stipulations, I'm aware of one stipulation,
13 said -- and I haven't made reference to the affirmative
14 really, and that's the one as to Memphis Shelby County,
14 acts set out in the indictment because Mr. Murphy has
15 Tennessee being located in the Western District of
15 actually put in some proof about some things that might be
16 Tennessee.
16 affirmative acts other than the acts in the indictment,
17
17 but I'm going to talk about what those could be. Tax due,
Number of witnesses and credibility, that's the
18 standard instruction. The number of witnesses is not
18 that's the first element, obviously.
19 controlling. Of course, that's an appropriate one.
19
20
20 actually elaborated on this somewhat. In the middle of
Then credibility as to defendants. Since she
Second element, affirmative act, I have
21 did testify, we usually give the 7.02B instruction, and
21 the paragraph of -- the second paragraph, there are
22 just say they apply the same things in determining
22 different ways in which a tax may be evaded or an attempt
23 credibility of the defendant as any other witness.
23 may be made to evade it. For example, in this case, the
24
24 government asserts that Ms. Kuglin attempted to evade or
Law enforcement witnesses, we certainly had law
25 enforcement witnesses, and it just cautions them to treat
25 defeat the income tax by filing false Form W-4s for
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655
application as to each year -- each tax year alleged in
Court. The Supreme Court has defined this element as
2 the counts in the indictment. I didn't say that -- I used
2 requiring proof of conduct, the likely effect of which
3 that for example language because the government also is
3 would be to mislead or conceal. In other words, in any
4 making the argument and has put on proof about large cash
4 act which is likely to mislead, the government -- or
5 transfers. It's not a real strong one, so I'm willing to
5 conceal funds satisfies this element. Thus, filing a
6 strike that.
6 false form, for example, a W-4 withholding form, or a
7
7 false tax return is sufficient -- there's no lost tax
MR. MURPHY: Judge, what I'm going to argue --
8 I'm not going to argue cash transfers were necessarily
8 return here, but that's an example -- as are false
9 acts of evasion, but that they were --
9 statements made to the Internal Revenue Service after the
10
10 return was due or filed. Large cash transactions may also
THE COURT: Let me tell you what I said about
11 be evidence of an affirmative act of evasion. I said
11 it.
12
MR. MURPHY: Okay.
12 evidence of, Mr. Murphy, I didn't say an affirmative act.
13
THE COURT: And you may not find it to be -- I
13 I think that's what I should say.
14 didn't say they were acts of evasion, I said it might be
14
15 evidence.
15 we're going to argue.
16
16
MR. MURPHY: That is what our position is going
MR. MURPHY: Judge, that's correct, that's what
THE COURT: And then it says it is not
17 to be, Judge.
17 necessary to prove a separate act constituting evasion for
18
18 each year, tax year, which is the subject of the
THE COURT: That's what I said, I didn't say it
19 was. It could be, it can be an act. Anyway, I think
19 prosecution; thus, filing a false W-4. I think in this
20 you're relying on the W-4s, primarily.
20 case you have got a W-4 for each year, but it can be for
21
21 filing a false statement for withholding form satisfies
I do go through the fact that the government
22 has to prove an affirmative act constituting evasion, that
22 this element as to each year for which it was in effect.
23 must be a positive act. I say it's not failure to file or
23 I think that's the law, so -- the third element is the
24 a failure to pay, which is true, that's not an affirmative
24 willfulness element. There is a lot of discussion here,
25 act, let me make that clear. I then reference the Supreme
25 and this is really more than either one of you submitted,
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657
and if you don't like it, you need to tell me. Whether or
it certainty often arises even among taxpayers who
2 not the defendant acted knowingly and willfully is a
2 earnestly wish to follow the law. It is not the purpose
3 question of fact to be determined by you based on all the
3 of the law to penalize frank differences of opinion or
4 evidence in the case. An act is done knowingly if it's
4 innocent errors made despite the exercise of reasonable
5 done purposefully and deliberately and not because of
5 care. Degrees of negligence give rise in the tax system
6 mistake, accident, negligence or some other innocent
6 to civil penalties. And I think that's fair because we
7 reason. The government must also prove beyond a
7 have heard some things about civil stuff. The requirement
8 reasonable doubt the defendant acted willfully. A willful
8 that an offense be committed willfully is not met,
9 act is defined as voluntary and intentional violation of a
9 therefore, if the taxpayer has relied in good faith on a
10 known legal duty, and we talked about the government has
10 prior decision of the Supreme Court. The Internal Revenue
11 to prove that.
11 Code or the regulations and instructions published by the
12
12 Internal Revenue Service. Thus, the word willfully
And then we say willfully, defined further,
13 referring to the Supreme Court case, one of the Supreme
13 under -- I think we have got our code number wrong here,
14 Court cases that we have been looking at. The word
14 it's 26, I'm sure, isn't it?
15 willfully in the criminal tax statutes requires a
15
MR. MURPHY: Yes, sir, Your Honor, Title 26.
16 voluntary, intentional violation of a known legal duty, so
16
THE COURT: That's a typo. USC -- U. S. Code,
17 repeating it, but then I'm going to say more about it.
17 Section 7201, includes the concept of bad faith or evil
18 The requirement of willfulness, therefore, means an act
18 intent that separates the purposeful tax evader -- or tax
19 undertaken with bad faith or evil intent or evil motive
19 violator, from the well-meaning, but sometimes confused,
20 and want of justification in view of all the financial
20 mass of innocent taxpayers.
21 circumstances of the taxpayers. That's direct language
21
22 from -- I have a copy of the opinion, but of a '93 -- '73
22 Supreme Court said, and I think we kind of need to make
23 Supreme Court opinion. In our complex -- this is the
23 this distinction because I perceive the government is
24 language that the Supreme Court says.
24 arguing that she is not in the mass --
25
25
The next paragraph. In our complex tax system,
Now, Mr. Murphy, that's pretty much what the
MR. MURPHY: That's correct. Judge, I don't
660
659
THE COURT: But I'm not sure it sounds good.
have an objection to that.
2
MR. BECRAFT: Okay. All right.
3 I'm pleased with your willfulness instructions.
3
THE COURT: That last phrase in that sentence
4
4 for mental attitude and approach to the situation which
2
MR. BECRAFT: You want to hear from me, Judge?
THE COURT: I'm not even through yet. Well,
5 then to go to good faith defense, you're right. And then
5 the law required of her some action, and this is exactly
6 we start talking about good faith defense. There is one
6 what you wrote, but I think that's not what you meant.
7 thing on good faith defense we may need to add. I noticed
7
8 something earlier. What I have done is I've taken the
8 says willfulness is negated by the defense of a good faith
9 defendant's and the government's, but the government,
9 mistake --
10 there was a little bit of stuff missing, so I put them
10
11 together side-by-side. Willfulness is -- the first part
11 the first one. Do you want to say it that way? I mean
12 of the willfulness defense is from the defense, and that
12 that last little phrase just doesn't quite -- do you think
13 is just the intro on willfulness, is negated by the
13 it is okay?
14 defense of a good faith mistake of the law requirements,
14
15 and I think that's the more complete statement. To make
15 problems, maybe we can strike it.
16 such a determination, one must inquire into the
16
THE COURT: Which the law requires.
17 defendant's mind or mental attitudes and approach the
17
MR. BECRAFT: If you believe that the
18 situation which the law required of her. I may have this
18 defendant, subjectively in her own mind, believed that she
19 wrong, which the law required of her some action. That
19 was not required by the law to file the tax returns in
20 doesn't look quite right. I will look it up here.
20 question, it will be your duty to find her not guilty. Is
21
21 that the line that the court is --
MR. BECRAFT: Perhaps the court is reading too
MR. BECRAFT: Okay. Are we on the page that
THE COURT: Yes, it's good faith defense. It's
MR. BECRAFT: Well, if it is causing some
22 closely, I don't see that there is a --
22
23
23 this second line of the sentence, and I had a lot of
THE COURT: This is exactly what you wrote
24 trouble before, and I thought I would bring it up to you.
24 down.
25
THE COURT: What I'm having trouble with is
MR. BECRAFT: Yes, sir.
25 It is, to make such a determination, you should must
662
661
MR. MURPHY: They follow the law, I don't know
inquire into the defendant's mind, her mental attitude and
2 approach to the situation which the law required of her
2 that mine would be a whole lot different.
3 some act, and I think that's okay. I just think it's kind
3
4 of --
4 to -- I didn't want to change the defendant's language
THE COURT: Okay. Well, then I just wanted
5
MR. BECRAFT: Awkward.
5 without the defendant agreeing to it is the main thing. I
6
THE COURT: -- awkward. If you want it, I will
6 think we have got that changed now, I feel comfortable
7 leave it.
7 with it.
8
8
MR. BECRAFT: Okay, if the court will leave it,
Then we go to what the government said, which
9 I'll live with it.
9 was a part of the Sand material, and then I go to the
10
10 defendant's good faith, and we may want to try to change
THE COURT: And approach the situation. I
11 usually like my instructions to sound good. That's the
11 our font on that because I don't particularly like the way
12 problem I'm having. No offense. I would like to change
12 the font came out because there's a change in font. And
13 it and make it sound a little better, if we can. Her
13 then this is their repeated one. I wanted you to look at
14 mental attitude -- let's just say this: Her approach to
14 this, Mr. Murphy. I was inclined to give something real
15 the situation which she believed the law required.
15 close to it because the defense is entitled to something
16
MR. BECRAFT: That will be good, Judge.
16 pretty close to it. If the defendant acted in good faith,
17
THE COURT: Is that okay?
17 that is to say she actually believed the actions she took
18
MR. BECRAFT: Yes, Your Honor. I'm real
18 were allowed by the law, then she is not guilty of the
19 pleased with what the court has done.
19 offense of tax evasion or willfully failing to file income
20
20 tax returns. And it does not -- I think we're taking out
THE COURT: Well, okay. Mr. Murphy, I think
21 that's -- that's all a part of the case.
21 the willfully failing because that's not -- we don't want
22
22 to confuse the jury there. It does not matter whether the
MR. MURPHY: Judge, I'm stuck with that, I
23 don't think there's a lot I can do about it. If I could
23 defendant was right or wrong in her beliefs, nor does it
24 write the jury instructions --
24 matter that her beliefs make sense or sound reasonable to
25
25 you, the jury, or to me, as the judge. The only thing
THE COURT: Well, we wouldn't --
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THE COURT: I'm a little concerned that we
that matters is whether or not the defendant actually
2 believed she was correct in her actions. Also, it is not
2 don't have that burden language from the instruction, I
3 the defendant's burden to prove that she did believe her
3 may switch and add that in. I will show you where. I
4 actions were correct, rather the government's burden to
4 think I will. Remember, the burden of establishing lack
5 prove that she did not. That's true. You stated that a
5 of good faith and criminal intent rests upon the
6 little differently than the Sand instruction, which is the
6 prosecution. A defendant is under no burden to prove her
7 burden. I may later on at some point modify that. It is
7 good faith, rather the prosecution must prove bad faith or
8 for you, the jury, to decide whether the government has
8 knowledge of falsity beyond a reasonable doubt. We will
9 proved that the defendant willfully committed tax evasion
9 add that right there at that point. I think that's what
10 by proving beyond a reasonable doubt that she did not
10 we ought to do. Okay.
11 actually believe her actions were correct, and by proving
11
12 all the other elements that I have explained to you in
12 defendant is not presumed to know the law, that's true.
13 these instructions, or whether the defendant believed her
13
14 actions were proper. If you find that the government has
14 publications and word voluntarily. I think we better give
15 failed to meet its burden, then you must find the
15 that, Mr. Murphy, there has been so much talk about
16 defendant not guilty of these offenses. If there's a
16 voluntary, I think I probably better give it.
17 reasonable doubt in your mind as of this issue, or even if
17
18 you conclude that the defendant could have only believed
18 took the Paperwork Reduction Act --
19 her actions were proper by abysmal ignorance and the
19
20 rankest kind of stupidity -- and I think you're allowed to
20 it over there on G9, the next one over.
21 have language like that -- yet you find that she believed
21
22 she was correct, you must find the defendant not guilty.
22 be given, and a third thing that should be given, I
23 Mr. Murphy, I mean there is a lot of cases that say that.
23 believe, based on the testimony, the Seventh Circuit has
24
24 taken up the question of whether wages are income several
MR. MURPHY: Judge, I don't have an objection
25 to that.
All right. The next one in this case, the
Government, this is the one on the IRS
MR. MURPHY: Judge, I agree, and I know you
THE COURT: Actually, I put a little piece of
MR. MURPHY: Yes, sir. And I think that should
25 times, and Judge Bower has said in a footnote in a case
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665
Colabowski (spelled phonetically), that although not
perceive that as being particularly the defendant's
2 raised in his brief, on appeal, the defense's entire case
2 position.
3 at trial rested on the claim to be in good faith belief
3
MR. BECRAFT: It isn't, Your Honor.
4 that wages are not income for taxation purposes. Whatever
4
THE COURT: But I think that because of the
5 his mental case, he, of course, was wrong, as all of us
5 evidence there might be some confusion on it. So what we
6 are already aware; nonetheless, the defendant still
6 will say is -- I'm going to add that where I have got
7 insists that no case holds that wages are income. Let us
7 the -- in this case, the defendant is presumed to -- is
8 now that to rest, wages are income. Any reading of tax
8 not presumed to know the law. I should -- I instruct you,
9 cases by would be tax protesters should now preclude a
9 however, that the law is that wages are income, I was
10 claim of good faith belief that wages or salaries are not
10 going to say, and must be included in gross income for
11 taxable. I think we ought to have an instruction that
11 purposes of income tax, and must be included in gross
12 wages are income for income tax purposes.
12 income when determining income tax liability.
13
13
THE COURT: You're entitled to something like
MR. MURPHY: Judge, I have no objection to
14 that. We had a gross income definition in the Tony Alamo
14 that.
15 case. We usually give something like that. Nobody
15
MR. BECRAFT: Neither here, Your Honor.
16 submitted it, but I actually had one out to ask about. If
16
THE COURT: Okay. That will clear that up, and
17 you have got that written down, I would rather use one
17 that takes care of that. Okay. I've put that in the
18 that is written down.
18 earlier section, Ms. Wherry. And then we have got
19
19 inferring mental state. Obviously, this is all about
MR. MURPHY: Judge, I don't have it written
20 down, but I can write something down for you.
20 mental state, so I'm just going to give the standard
21
THE COURT: Have you got the case right there?
21 instruction on inferring mental state. If nobody has any
22
22 objection, that will be just a sum up. I have got the
23
THE COURT: Why don't you just hand Ms. Wherry
23 summary. If you find that the government has proved
24 the case?
24 beyond a reasonable doubt each of the elements of the
25
25 offense as set out in these instructions, then as to the
I'm going to put add wages are income. I don't
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667
count that you're considering, you must return a verdict
liability. This is a criminal case. The defendant is
2 of guilty as to that count. If you find that the
2 charged under the law with the commission of a crime, and
3 government has not proved beyond a reasonable doubt each
3 the issue is whether the defendant has or has not -- now,
4 of elements of the offense as set out in these
4 there's no -- do I need -- I thought there might be some
5 instructions, then as to the count that you're
5 proof on this, but there wasn't anything about her
6 considering, you must return a verdict of not guilty as to
6 settling any civil liability questions.
7 that count. That's to remind them that we have concluded
7
8 the discussion of the substantive questions.
8 It's one of those things that, you know, you kind of think
9
9 about what jurors are going to think about, and that's the
Then I caution you to -- it's just the normal
MR. BECRAFT: None. There wasn't, Your Honor.
10 caution about they're only deciding this case, they're not
10 only reason why I ever ask it. Well, gee, if we acquit
11 deciding any other case. They're here to determine the
11 her on a crime, she doesn't have to pay taxes.
12 guilt or innocence of the accused, not to return a verdict
12
13 as to anybody else. I usually put that in just in case
13 didn't have any problem, it was not an inappropriate
14 somebody is confused.
14 inquiry and, obviously, everybody knows that there are
15
15 both civil and criminal aspects of the tax law, I think.
I also put the defendant's instruction in. You
THE COURT: Oh, I see what you're saying. I
16 have no right to find the defendant guilty only for the
16
17 purpose of deterring others from committing crime. That's
17 that the Commissioner of Internal Revenue has the power to
18 certainly right, they have got to decide whether she
18 make a return and assess a tax -- but I don't think we
19 committed this crime or not, not whether they were
19 need to do that now, do we?
20 concerned about somebody else not paying taxes when they
20
21 should pay.
21
THE COURT: We're going to strike that.
22
22
MR. MURPHY: I have no opposition to that,
I did include, again, a reference, because we
I did include this: When you're instructed
23 referenced civil liability earlier, so I included
23 Judge.
24 defendant's D-30, there's a distinction between the civil
24
25 liability of a defendant and a defendant's criminal
25 unanimous, explain the verdict form and excuse our
THE COURT: And then the verdict has to be
670
669
MR. MURPHY: Judge, I would rather not --
alternate jurors, and then we have got a verdict form,
2 which just says Counts 1, 2, 3, 4, 5 and 6, and it has
2
3 guilty or not guilty. I'll tell them about that. It has
3 ignorance in this case, it might be reversed.
4 got a copy of the indictment with all the prison ranges
4
MR. MURPHY: I don't disagree, Your Honor.
5 taken out, because that's not appropriate for a jury to
5
THE COURT: If you find a case that says to the
6 consider.
6 contrary, we might consider it, but otherwise...
7
7
All right. Gentlemen, ladies, have we -- any
THE COURT: I think if I gave deliberate
All right. Let me ask you both, do you want to
8 objections to the instructions as revised?
8 come back and start at 9:00 o'clock tomorrow and do your
9
9 closes at that time? I -- that's perfectly okay, we don't
MR. MURPHY: Judge, the only thing I'm
10 wondering, I wonder if, given the proof, if I would be
10 expect the jury to finish anyway, and it's -- you know,
11 entitled to the deliberate ignorance instruction? I don't
11 about six minutes till 4:00.
12 know how that plays out --
12
13
THE COURT: No, no, I'm worried about that.
13 appropriate way to do things, go ahead and end for the
14
MR. MURPHY: I don't think that would fit in
14 day.
MR. MURPHY: Judge, I think that's an
15 with the good faith --
15
MR. BECRAFT: I concur, Your Honor.
16
16
THE COURT: Okay. Well, then you have got your
THE COURT: Mixing that in with the good faith,
17 I think --
17 sets of instruction. You can use the instructions in your
18
18 close. You can quote from the instructions. You can put
MR. MURPHY: I think I can argue a deliberate
19 ignorance kind of argument, that she ignored parts of the
19 something on the screen if we get a final one that's all
20 law.
20 clear for you, and we will probably have that for you a
21
THE COURT: Right. You can argue the
21 little before 9:00 o'clock tomorrow morning.
22 unreasonableness of her position in attacking whether she
22
MR. BECRAFT: Judge, can I make some
23 actually had a good faith belief.
23 objections?
24
24
THE COURT: Sure.
25
THE COURT: I --
25
MR. BECRAFT: You know, I presume this is kind
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of like a charge conference.
that and then have the instruction. I think that's always
2
2 better than having to split them up, that's just not --
THE COURT: That's what we thought we were
3 that's probably not the best way to do it. And I'm going
3 doing.
4
MR. BECRAFT: Okay. Good enough. Then my only
4 to tell you there's no way we could get the case to you
5 objections, Your Honor, I submitted, defense requested
5 this evening so that you could begin your deliberations,
6 instruction seven through nine that relate to the lesser
6 that would not be practical. So we have decided to let
7 included offense, and we have dealt with that matter, I
7 you go home early, if that's all right. Anybody object?
8 think.
8 All right. Without objection, then we're going to let you
9
THE COURT: I overruled the submittal and
9 go home early, and we will spend -- we will start at 9:00
10 concurred with the government.
10 o'clock tomorrow morning in here with the closing argument
11
11 by Mr. Murphy and then, of course, defense counsel has a
MR. BECRAFT: That's all I have, Your Honor,
12 and I'm pleased with the court's instructions.
12 chance to make a closing argument. Mr. Murphy has a short
13
THE COURT: Mr. Murphy, anything else from you?
13 rebuttal, if he wants to, and then we will have the
14
MR. MURPHY: No, Your Honor, I have no
14 instructions on the law.
15 objections to the court's instruction.
15
16
16 one thing, I want you to avoid anything in the newspaper
THE COURT: We're going to bring the jury in
Have a very pleasant evening. I want you to do
17 and let them go come back at 8:30 tomorrow, we will start
17 that might be about the case. If you happen to see
18 in here at 9:00 with closing argument and then final
18 anything, I want you to not pay any attention. And you
19 instructions inclusions on the law.
19 should let me know if you see something and you're
20
20 concerned at all that it might influence you. I want you
21
THE COURT: Ladies and gentlemen, we have had
21 to be careful to avoid that. Just don't read the paper
22 our charge conference, we've gone through all the
22 tomorrow. That's probably the best thing to do. You can
23 provisions of the law. Everybody agrees it would be
23 look at it when you go home tomorrow afternoon maybe,
24 better, because we cannot finish the arguments this
24 depending on whether you have concluded your determination
25 afternoon, to do them all tomorrow morning. We can do
25 in the case.
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673
Well, now, let's go back through everything.
to have somebody stay around until they bring out the
2 Don't discuss the case among yourselves. Don't let
2 final version of the charge, you're welcome to do that.
3 anybody talk with you about it. You have heard all the
3 Of course, you're welcome to be excused and pick it up
4 evidence, but you have not heard the final arguments of
4 tomorrow, whichever you want to do is fine. I going to go
5 counsel, you have not heard the final instructions on the
5 back and finish it up, and I'm sure we will get it
6 law, and you have not had a chance to go to the jury room
6 completed within the next 30 or 45 minutes, at the most.
7 and then have that discussion among yourselves. So you're
7
8 to keep an open mind until you have done all those things,
8 in the morning.
9 then you're to begin that process in making up your minds
9
10 individually and then making up your mind as a jury.
10 make it available for you as soon as you like it. Thank
11
11 you very much.
As you leave today and when you come tomorrow,
MR. BECRAFT: Your Honor, I will just read it
THE COURT: Whatever you wish to do. We will
12 of course, avoid any contact with defense counsel or with
12
MR. BECRAFT: Have a good evening, Judge.
13 government counsel or with anybody associated with any
13
14 side in the case. If anybody tries to talk to you about
14
15 the case, report it promptly to one of our court security
15
16 officers or directly to me, we will take the appropriate
16
17 steps. Do not do any -- make any inquiry or do not make
17
18 any -- do not do any research or make any investigation at
18
19 all, as you know, and, of course, avoid anything on
19
20 television, radio or TV that might be about this case or
20
21 cases like it. Keep an open mind. We will see y'all
21
22 tomorrow at 9:00 o'clock. We should start right on time,
22
23 there shouldn't be any problem. We will see you then.
23
24
24
25
THE COURT: If you want to wait -- if you want
25
676
WESTERN DIVISION
)
Plaintiff,
)
)
VS.
)
)
)
VERNICE KUGLIN,
)
)
Defendant.
)
NO. 03-20111-Ml
AUGUST 7, 2003
VOLUME IV
BRENDA PARKER
OFFICIAL REPORTER
APPEARANCES
209 LINCOLN STREET
678
677
THURSDAY MORNING & AFTERNOON
2
3
AUGUST 7, 2003
we're end at the end, it wouldn't make any difference
2 matter. It would just be Collective -- what's the next
3 number for identification only, not received?
4 Thursday, August 7, 2003, at 9:00 o'clock a.m., when and
4
5 court? Will you give the instructions to the jury when
6 follows:
6 they go back to deliberate as well, a copy?
7
7
THE COURT: Yes, sir. Right.
8
THE CLERK: Exhibit 58.
9
THE COURT: My sheet is missing. Maybe I can
8
____________
9
MR. BECRAFT: Can I make one inquiry with the
10
THE COURT: Everybody ready to proceed?
10 find it.
11
MR. MURPHY: The government is ready, Your
11
That will be 59 for identification. 58 was the
12 Honor.
12 1995 1040 form instructions, so 59.
13
13
THE CLERK: ID.
14 two quick matters to take care of. Yesterday, we had, I
14
THE COURT: ID only, four letters.
15 thought it was Exhibit 50, I don't know what the exhibit
15
16 number is, but he had the Code of Federal Regulations
16 Four Letters.)
17 book, and he substituted in lieu thereof some pages --
17
18
THE COURT: Right.
18
MR. MURPHY: Judge, you want us wearing the
19
MR. BECRAFT: Which the clerk has got. Second
19 mics this morning, the sound equipment?
MR. BECRAFT: Your Honor, I think we have got
20 point, I offered, but the court didn't admit those letters
20
21 from the lawyers, and I would like to make sure that
21 You know, we all think we can be heard easily, but it's
22 they're in the record. I gave them to her.
22 not always -- I know you're pretty easy to hear actually,
23
23 Mr. Murphy, but I kind of have to get everybody to do the
THE COURT: Okay. They will just be
THE COURT: I think it's probably a good idea.
24 collective, I think we have already got an A, I think it's
24 same thing.
25 B as submitted. We could give them ID numbers now that
25
CLOSING ARGUMENT BY MR. MURPHY
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MR. MURPHY: Good morning, ladies and
COURT SECURITY OFFICER: Good morning, Your
2 Honor.
2 gentlemen.
3
3
THE JURY: Good morning.
4 Mr. Tuggle?
4
MR. MURPHY: We're at the end of the case as
5
COURT SECURITY OFFICER: Everybody is here.
5 far as the terms of presentation of proof. What we're
6
THE COURT: I've found if we let people pick
6 going to start with now is presentations of the argument,
THE COURT: Good morning. We got everybody,
7 and choose, people that need the mics don't want them.
7 and your real work will begin shortly when you go back
8
All right. Is everybody set?
8 into the jury room and you make a decision regarding this
9
MR. MURPHY: The government is ready, Your
9 case.
10 Honor.
10
11
11 service. I suspect nobody is looking forward to jury
THE COURT: Mr. Tuggle, we can bring everybody
I would like to thank you for your jury
12 service. It takes time out of everybody's schedule. It's
12 in.
13
13 difficult. As busy as folks are today, it is difficult to
14
THE COURT: You may be seated. And, Mr.
14 accommodate in your schedules, but it's important because
15 Murphy, is the United States ready to proceed with closing
15 in the United States, the people, ordinary people,
16 argument?
16 ordinary citizens decide these cases, and the system
17
17 doesn't function without you, so everybody thanks you for
MR. MURPHY: The government is ready to
18 proceed, Your Honor.
18 it. We appreciate it.
19
19
Now, this is a case about taxes. Obviously,
20
20 the question of taxes -- taxes is a pretty charged issue.
21
21 It goes without saying, taxes are always controversial.
22
22 Most folks would probably say they pay too much, but taxes
23
23 are part of the price we pay for living in the freest
24
24 wealthiest society in the world. And remember, this isn't
25
25 a case about whether taxes are good or bad; it's a case
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681
about whether the defendant evaded the taxes in this case.
doubt that the defendant was employed by Federal Express
2
2 Corporation as a pilot from sometime in the 1980s up until
Now, she's charged with six counts of income
3 tax evasion. There are three counts -- there are three
3 the present. Now, the period we're dealing with in the
4 elements to income tax evasion. That means there are
4 indictment is '96 through '97. The proof in this case
5 three things the government has to prove. The judge is
5 showed wages from FedEx of a 183,000, 172,000, $168,000
6 going to instruct you on this, but the government has to
6 172,000 in '99, 200,000 -- I mean 191,000 in 2000 and a
7 prove an affirmative act of evasion, and I would submit to
7 190,000 in 2001. You heard the tax computation. The
8 you, ladies and gentlemen, that based on the evidence in
8 taxable income is on this bottom line. For '96, it was
9 this case, that affirmative act of evasion was the filing
9 162,000, 147,000 in '97, '98 was a 137,000, it was a
10 of the false W-4 forms where the defendant claims she was
10 146,000 in '99, it was a 164,000 in 2000 and a 161,000 in
11 exempt for the period of years throughout which the taxes
11 2001. The tax due and owing $47,000 in 1996, $42,000 in
12 were not taken out of her check. The government has to
12 '97, $36,000 in '98, $41,000 in '99, $47,000 in 2000 and
13 prove beyond a reasonable doubt willfulness and, again,
13 $45,000 in 2001, tax due and owing. I would submit the
14 the government -- the judge will instruct you on that, but
14 government proved that beyond a reasonable doubt.
15 that is the violation of a known legal duty. In this
15
16 case, the defendant has made a good faith defense, and the
16 case overall. In addition to being a pilot, the proof
17 government has to prove that the defendant did not act in
17 showed that the defendant, and this is Exhibit 15, I would
18 good faith.
18 urge y'all to look at it. You can take any of these
19
19 exhibits back in the courtroom you wish to take back. But
Third, the government has to prove a tax
Let's talk a little bit about the facts in the
20 deficiency, so that -- beyond a reasonable doubt. Those
20 these are the W-2s. For 1998 or '88 rather, the defendant
21 are the three things we have got to prove. So let's start
21 claimed six exemptions. In 1990, she claimed ten.
22 with the tax deficiency, and let's talk about the case --
22
23 the facts of the case as we go through.
23 defendant had one child, and if you look at the '92 tax
24
24 return, it was actually submitted in that case, she had --
The proof in this case established, I would
25 submit to you, ladies and gentlemen, beyond a reasonable
Now, the proof in this case was that the
25 her child was the only dependent she claimed. She claimed
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10 exemptions, ladies and gentlemen.
interest income you had to have. '94, the IRS anyway, and
2
2 Ms. Kuglin knew about it, she didn't get a refund of all
Now, if you go forward to 1996, 1995, that
3 period of time, the defendant begins to submit W-4 forms
3 her tax -- all her taxes. And the IRS levied against all
4 where she claims she is exempt from taxes. Now, she
4 of it. Now, does that square up? You don't get the tax
5 didn't file in '93, she didn't file in '94. The IRS took
5 money back. The IRS levies against you and you claim you
6 action against her in both years to collect that tax. She
6 don't have any tax liability and you got a refund, you're
7 admitted on the stand she didn't get a refund in '94, and
7 entitled to a refund. Well, that's not what the IRS said,
8 if you look -- if you look at the forms -- if you look at
8 and she had notice of a lot of this stuff. We've got the
9 all these forms, they basically say two important things
9 letters, we introduced approximately seven letters
10 that you need to look at. I claim exemption from
10 beginning in '95. Also, her income, if you look at the
11 withholding for 1997, and I certify that I am both -- that
11 proof was more than $650 in 1996, and if you -- I would
12 I meet both the following conditions. Last year, I had a
12 also urge you, ladies and gentlemen, to look at these
13 right to refund of all federal income tax withheld because
13 documents called the IRP documents. For example, here is
14 I had no tax liability, and this year I expect a refund of
14 one for 2000. If you go to the back page of it, it shows
15 all taxable income withheld because I have no tax
15 the amount of interest income she got in dividends in
16 liability.
16 every case. What you're going to see, if you look at
17
17 those IRP documents, and those are Exhibits 3, 4, 5, 6, 7
If you go to this top portion, if you look at
18 this first paragraph there, it says no, you cannot claim
18 and 8, I believe, if you look at those documents, you're
19 exemption from withholding if, one, your income exceeds
19 going to see that a lot of these years where the note on
20 $650 and includes unearned income, interest and dividends,
20 the W-4 said do not claim exempt if you have more than
21 and two, another person can claim you as a dependent on
21 $650 in income and received unearned income, i.e.
22 their tax return.
22 interest. She had interest, she had more than $650 in
23
23 income and still she submitted the exempt certificate. I
Now, beginning with the '99 W-4 -- and the
24 language on most of these is the same. In later years,
24 would submit, ladies and gentlemen -- and we're going to
25 they imposed a specific amount of unearned income,
25 talk some about the good faith defense -- that that just
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685
wasn't true, that was an act of evasion, that was an
you, ladies and gentlemen, that you have to acquit her,
2 untruth statement.
2 but that belief has got to be good faith. And I would
3
3 submit, ladies and gentlemen, this case turns on the
Now, one other thing that is kind of
4 interesting about these W-4 forms, if you look at them,
4 question of the defendant's good faith.
5 there's a statement down there that you have to sign,
5
6 under penalties of perjury, I certify that I am entitled
6 is -- and this is part of it, this isn't the whole
7 to the number of withholding allowances claimed on the
7 instruction -- however, you may consider whether the
8 certificate or entitled to claim exempt status, and then
8 defendant's belief was actually reasonable as a factor in
9 Ms. Kuglin, in every case but one, adds reserving all my
9 deciding whether she held that belief in good faith. It
10 constitutional rights in this matter.
10 should also be pointed out that neither the defendant's
11
11 disagreement with the law, nor her own belief that the law
Well, ladies and gentlemen, if you're entitled
Now, the instruction the judge will give you
12 to it, why not sign it under penalty of perjury. I mean
12 is unconstitutional, no matter how earnestly that belief
13 if you're entitled to it and you think you're entitled to
13 is held, constitutes a defense of good faith. This case
14 it, and I would submit that that's an indication that she
14 turns on good faith.
15 didn't believe she was entitled to it, that she was trying
15
16 to limit her liability under that statement where she was
16 about credibility. The judge is going to instruct you
17 swearing under penalty of perjury that she was entitled to
17 about credibility. What credibility is, that's a lawyer's
18 those exemptions.
18 way of saying you can decide whether you're going -- how
19
19 much of a person's testimony you're going to believe, are
Now, let's talk -- we proved the acts of
Now, let's -- in talking about that, let's talk
20 evasion, I would submit to you, ladies and gentlemen,
20 you going to believe all, are you going to none of it, are
21 beyond a reasonable doubt, and the proof establishes that.
21 you going to believe some of it. As fact-finders, you
22 Now, let's talk a little about the good faith defense.
22 make that determination. In other words, is somebody
23 Under the good faith defense, if the defendant has a good
23 telling you the truth. And in this case, was this some
24 faith belief, in other words, she really believes that she
24 made-up deal to beat the tax system. And the reason I put
25 wasn't violating the law, the judge is going to instruct
25 that question mark after good faith, that's what this case
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687
turns on, her good faith.
Supreme Court, the Arkansas Supreme Court and the
2
2 Tennessee Supreme Court, which through her own testimony
Now, let's talk a little bit about the
3 defendant's contentions regarding the income tax that you
3 admitted that those were not -- that they were state court
4 heard yesterday when she was testifying on the stand. I
4 cases, not federal cases, and that they did not deal with
5 would submit the testimony you saw yesterday was the
5 the federal income tax laws. I would submit that that is
6 defendant claimed you can't tax ordinary occupations.
6 what the testimony was.
7 There's problems with the Paperwork Reduction Act. The
7
8 income tax is voluntary. There's no provision of the tax
8 take a trip from Memphis to, say, Los Angeles -- well,
9 law that imposes taxes on individuals, and there's
9 backing up a second, a lot of this -- the law she quotes,
10 jurisdictional problems. That's more or less, I would
10 for example, if you look at Exhibit 40, treasury decisions
11 submit, what the proof showed she claimed her basis was
11 from 1916, Jack Cole case, 1960. The Internal Revenue
12 for not paying taxes and not filing returns. So the
12 investigation 19 -- Exhibit 28, 1953. Kind of out of
13 question then is did she have a good faith belief, and,
13 date, isn't it? If you were going to take an automobile
14 ladies and gentlemen, again, if she doesn't have that good
14 trip from Memphis to Los Angeles and somebody came up
15 faith belief, I would submit the proof in this case -- if
15 today and they had a 1918 map, what would you think?
16 you determine she didn't have a good faith belief, I would
16 Would you think that's reasonable? Now, is that -- was
17 submit that the proof in this case indicates and
17 that a good -- does that constitute good faith? In her
18 establishes that she ought to be convicted.
18 own testimony, she had access to the Memphis State law
19
19 library over there at the law school. All kinds of books
Now, what indicates she didn't have a good
Now, ask yourself this: If you were going to
20 faith belief? Well, first of all, let's talk about the
20 over there. Does that constitute good faith? And you
21 age of some of those cases and where those cases were
21 talk about credibility, does the defendant have anything
22 from. She talked about the Pollock case from the 1800s.
22 to lose in this case? This is a defendant that over the
23 She talked about Brushaber which was a case prior to 1920.
23 six-year period encompassed in the indictment made over a
24 Prior to 1920, like 1914 or something, along those lines,
24 million dollars and paid $1300 in tax is all, when the tax
25 90 year-old case. She talked about cases from the Oregon
25 due and owing was over a quarter of a million dollars.
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Does she have a reason not to be truthful to you, ladies
that -- is that emblematical of somebody who is sneaking
2 and gentlemen?
2 around trying to beat the system? Does that constitute
3
3 good faith? Ask yourself about taking the money out of
Now, let's talk about the state cases. She
4 claims she relies on state cases. Ask yourself is that
4 the bank. We introduced the stuff from the bank. Pull
5 reasonable. She admitted, I would submit the testimony
5 out any statement and what you're going to see, I submit,
6 was, that those cases didn't deal with the income tax. If
6 ladies and gentlemen, if you examine it, is there's a
7 you get stopped for speeding in the State of Tennessee and
7 deposit from Federal Express to the defendant that same
8 the trooper comes up and says, sir, ma'am, you were
8 day or at the next day, she goes and makes big cash
9 speeding, and you say, well, the speed limit is 80 miles
9 withdrawals, several thousand dollars. I would submit
10 an hour over there in Germany on the Autobahn or it's 80
10 that is emblematical or indicative of somebody who is
11 miles an hour in Iowa, does that sound like a good faith
11 trying to beat the IRS out of tax money. Why do it -- if
12 excuse? Think about it. It's not -- I would submit that
12 you have got a good faith belief, what have you got to
13 is not good faith, ladies and gentlemen.
13 worry about? And, again, if you have a good faith belief
14
14 that you're exempt, why not just sign the W-4 that you
The W-4s, let's talk about that. Now, if Ms.
15 Kuglin really believed that she wasn't subject to tax, why
15 certify under penalty of perjury that you're entitled to
16 not pay your tax and contest it? You heard -- I would
16 it? Why not just sign it? Why add all this language
17 submit the proof was Ms. Kuglin testified yesterday that
17 about reserving all my constitutional rights. If it is
18 she has never filed a refund for all this tax money she
18 the truth, just sign it, what do you have to be worried
19 has paid in the past years. She filed for 25 years, at
19 about?
20 least tax returns, but she has never filed a refund. She
20
21 claims to really believe this, but she hasn't filed a
21 so -- you know, I would submit, based on a lot of this
22 refund. Does that sound like something that somebody that
22 stuff, that first issue of I'm not subject to a tax on
23 good faith believed this was true would do.
23 occupations, look at the age of the cases. Look at what
24
24 they're talking about.
The W-4s, is that true? Ask yourself that. I
25 would submit does that constitute good faith or does
25
The defendant talked about the fact that -- and
Now, let's talk about voluntariness. We
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introduced several exhibits like the '95 and '93 1040, and
doesn't support her position, none of that. But a lot of
2 the defendant talked about using some of this material in
2 what she claims to be the law, there's stuff in the very
3 arriving at her conclusions regarding the income tax,
3 material that she used that disputes that fact. She is
4 but -- that it didn't apply to her.
4 tiptoeing through the tulips, ladies and gentlemen. If it
5
5 helps me, I'm going to pick it. If it doesn't help me,
Judge, my mic is falling apart. I may blow
6 everybody out of their chairs. If you look -- go through
6 I'm going to disregard that. Taxes are voluntary. She
7 these books, the highlighted portions, it's clear there's
7 got on the witness stand and told you, I would submit,
8 language about penalties, and, you know, she talked
8 ladies and gentlemen, that there was no provision in the
9 about -- she talked about the OMB issues. But you want to
9 law that required payment of the income tax. I asked her
10 know something, the same section that they talk about the
10 are you familiar with Section 1 of Internal Revenue Code,
11 OMB issues in here, they talk about penalties for not
11 tax imposed? She turns to it in her book, said that she
12 filing. And there's also language in these books that
12 had been -- knew about this section for years. Section
13 indicate if you have a certain amount of income, you have
13 one, the first section of the Internal Revenue Code,
14 to file.
14 unmarried individuals other than surviving spouses and
15
Now, one thing that is striking about the
15 heads of household, there is hereby imposed on the taxable
16 defendant's claimed study of the law, remember the old
16 income of every individual, other than the surviving
17 song by Tiny Tim, Tiptoe through the Tulips, you have to
17 spouse as defined in Section 2A or the head of a household
18 be a little older to remember that. Tiptoe through the
18 as defined in Section 2B1 who is not a married individual
19 tulips with the garden with me. Well, she tiptoed through
19 a tax determined in accordance with the following table.
20 the tulips. Stuff that helps her support her argument,
20
21 and I would submit it doesn't support her argument. Boy,
21 that and say in good faith, well, I'm not required to pay
22 she can talk all about it, tell you all about that stuff,
22 tax. And we went through all those other code provisions
23 tell you about a 1914 case, a 1916 Treasury Department
23 yesterday, which she admitted she read that says shall
24 decision, tell you all about that. Now, doesn't know
24 make returns, all that sort of language, y'all remember
25 anything about the modern law, hasn't read anything that
25 that. Now, how could you read that stuff and say I'm not
Now, ladies and gentlemen, could anybody read
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required to pay, I'm not required to file?
older, I have trouble reading things close up, 1.6012-1,
2
2 it reads basically that except as provided in paragraph --
You heard her talk about some of the materials
3 she used. Now, a lot of those materials were not
3 in subparagraph two of this paragraph, an income tax
4 government materials and, specifically, there was
4 return must be filed by every individual before the
5 testimony about IRS code words, that wasn't government,
5 taxable year beginning January 1, 1973 during which you
6 and you ought to ask yourself, does a reasonable person
6 received $600 or more of gross income and for each taxable
7 say shall doesn't mean shall, is that reasonable?
7 year beginning after December 31st of 1972, during which
8
8 you receive $750 if such individual is a citizen of the
The OMB argument, you know, the Paperwork
9 Reduction Act wasn't complied with. A couple of things
9 United States. And her testimony, I would submit, ladies
10 about that. There's an OMB number on all these tax forms.
10 and gentlemen, that she was a citizen of the United
11 It's right up here, it is highlighted, it's 1545-0074.
11 States. Her testimony was also that she knew about this
12 Now, Ms. Kuglin's claim, I would submit, that the evidence
12 regulatory provision. She had known about it for several
13 has established is that the OMB -- the OMB requirement
13 years.
14 hasn't been complied with and she can't determine what tax
14
15 form she is supposed to use. Okay. Now, this is somebody
15 return, Form 1040 is prescribed for general use in making
16 that was able to go out and find an Internal Revenue
16 the return required under this paragraph. Form 1040A is
17 cumulative bulletin from 1985. This is the one for the
17 an optional short form, which in accordance with paragraph
18 first half of the year. She can find that, find cases
18 A7 of this section may be used by certain taxpayers. This
19 from 1890s, 1914 or '13, can find Treasury Department
19 says you have got to file a 1040, but under the
20 decisions from 1916, but in this index, well, I don't find
20 defendant's explanation, somebody that has something to
21 the reference to the 1040 form. Well, if you go over, if
21 lose and has had time to concoct all this stuff, who
22 you -- if you look at that number on the 1040 form, it's
22 selectively reads the IRS code, I would submit that the
23 all up -- in and out throughout this whole list. Okay.
23 defendant whose testimony was I can't find anything in the
24 It's right there. We circled it. And that code provision
24 code that says I have got to file a tax return or pay.
25 or this regulation, Exhibit 56, I can tell I'm getting
25 Her testimony is I know about it, but, you know, shall
If you flip over further, this says forms of
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doesn't mean shall. Isn't it odd that you can find
stopped for speeding, for example, and you ask the
2 something like that? She can find something like this,
2 officer -- he gives you a ticket and you say, well, I
3 but she can't find anything that disagrees with her
3 don't think I should have gotten the ticket, do you think
4 position. And I would submit to you, ladies and
4 you have got an obligation not to go to court that day or
5 gentlemen, it was because she was selective. It wasn't
5 go to the court appearance on that basis? Is that
6 because she really believed it, it was because she was
6 reasonable? I would submit it's not. And that's really
7 selective. It was because she didn't like paying the tax.
7 what -- well, I wrote the IRS these letters, and look at
8 She disagrees with the law, she doesn't really have a good
8 the letter, there's one letter, the only issue --
9 faith belief. However, you may consider whether the
9 initially what she raised was that OMB argument. She got
10 defendant's good faith belief was actually -- was actually
10 asked, how about cases that dealt with the OMB issue.
11 reasonable as a factor in deciding whether she held that
11 Well, I -- I don't know anything about those, don't know
12 belief in good faith. Is this stuff actually reasonable?
12 anything about 1989 cases and, again, this is a woman that
13 Ask yourself that. Remember, this case turns on good
13 can get up there and tell you about -- about a 258
14 faith. Ask yourself that.
14 Supreme -- page Supreme Court decision in the Pollock
15
15 case, but can't tell you -- who flies planes
Now, one other thing, we're not dealing with an
16 uneducated person here. We're dealing with somebody who
16 internationally for FedEx, makes well over a hundred
17 has got a pilot's license, that flies with FedEx, that is
17 thousand dollars a year, but she doesn't know anything
18 a big income earner.
18 about any of these cases later on that might hurt her
19
19 position. Is that reasonable? Is that believable? Is
The defendant claims she didn't believe she had
20 to file a return. Well, the IRS, I would submit the proof
20 that credible? That is for you, ladies and gentlemen, to
21 was, sure believed she did and kept sending her notices,
21 decide, but I would submit that based on this evidence,
22 send her notice after notice, and those were introduced
22 it's not.
23 into evidence. She admitted she got them. Where is your
23
24 1040? She claims she tried to get answers from the IRS.
24 penalties for failure to file. We asked her about that
25 Well, ladies and gentlemen, here is the thing: If you get
25 from the code. Oh, yes, I know about that. It goes back
You heard testimony. She knew that there were
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to the same thing, I'm not somebody liable for the tax.
defendant got up there, she has made the good faith
2 Well, Section one, you didn't hear her testify indirectly
2 defense, the burden is on the government to rebut that
3 about Section one, did you? Because that cuts the legs
3 defense, to prove beyond a reasonable doubt that she
4 out from under her argument.
4 didn't believe it in good faith, but if you look at her
5
5 own testimony, look at her own testimony, what she
You heard the testimony from Mr. Scobey, and
6 that was short testimony, but I would submit it was
6 testified to on cross, I would submit that establishes she
7 significant, and here is why. If you're not doing
7 didn't have a good faith belief. Look at the other things
8 anything wrong, what do you care whether somebody you have
8 she has done, like the false W-4s, like that little deal
9 a business relationship with cooperates with the IRS in an
9 with reservation of all my constitutional rights where she
10 investigation. What do you care? I'm not doing anything
10 is supposed to certify it's true, stripping the money out
11 wrong, haven't done anything wrong, I really believe this
11 of the bank, those are indicative of attempt to evade.
12 stuff, or if you really didn't believe it, if it was all a
12 The fact that she had an opportunity to sit down with the
13 come on, if really what was going on was you disagreed
13 IRS and talk about, I would submit the proof was, her
14 with the tax law, ask yourself would you not want the IRS
14 taxes, not somebody else's, not some general kind of,
15 talking to somebody you had a business relationship with.
15 well, why does the code apply to me, but her taxes, ladies
16 I would submit, ladies and gentlemen, that common sense
16 and gentlemen, her situation, what she owed the IRS, what
17 indicates you wouldn't.
17 she was required to file. She had that opportunity, she
18
18 didn't do it. I would submit there's a reason why.
Ladies and gentlemen, I have probably talked
19 too long now. Thank you for your participation in this
19
20 case. Thank you for listening to the evidence and the
20 submit that the government has established beyond a
21 lawyers.
21 reasonable doubt that the defendant evaded income taxes as
22
22 charged in the indictment, and I would ask you, ladies and
In closing, I would like to say to you, ladies
In closing, ladies and gentlemen, I would
23 and gentlemen, I submit that if you consider the proof in
23 gentlemen, based on that proof to return a verdict of
24 this case, all the proof, you're going to come to the
24 guilty as to all six counts of the indictment. Thank you,
25 conclusion -- and remember you don't -- the fact that the
25 ladies and gentlemen.
CLOSING ARGUMENT BY MR. BECRAFT
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THE COURT: Does the defense wish to give a
2 closing argument?
2 and gentlemen of the jury, you were picked, we went
3
3 through a jury selection process on Monday, you had a
4
4 bunch of questions asked of you, the lawyers got together
5
5 and we made a selection of the potential -- of the jurors
6
6 that would sit down and try this case. I have watched you
7
7 over the last several days, and it's clear to me, and I
8
8 know it's clear to Ms. Kuglin, I know it's clear to Ms.
9
9 White, and I know it's clear to Mr. Murphy, and I know
10
10 that Judge McCalla knows that this is the case that each
11
11 and every one of you have been attentive. You have
12
12 listened and you have diligently discharged the obligation
13
13 of being a juror. Being a juror is real important for
14
14 justice to be meted out here in America. Be it a civil
15
15 case or a criminal case, these controversies that we have
16
16 in our society are resolved only because people such as
17
17 yourselves, the people of a community acknowledge that we
18
18 have to have a way of resolving our controversies here in
19
19 America and they have a willingness to come in and decide
20
20 disputed cases such as this one.
21
21
22
22 everybody on this side of the courtroom from the court on
23
23 down, we want to thank you for the service that you have
24
24 given in this case. As Judge McCalla -- and there is no
25
25 doubt -- there can be no doubt that this is a criminal
And let me just tell you, ladies and gentlemen,
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701
case, and the way we try criminal cases here in America is
reasonable doubt is a doubt based on reason and common
2 they are a little bit different from a civil case. You
2 sense, and a lot of people really understand that in a
3 know, we got -- picture in your mind, if you will, that
3 criminal case, the government has got to prove their case
4 the lady, the lady of justice that holds the scales, the
4 beyond a reasonable doubt, but there is a real important
5 balances. Well, the system of justice here in America
5 concept that I want you to remember, and it has direct
6 says that in a civil case, the party that prevails is the
6 application to this case. Judge McCalla is going to tell
7 one that has the preponderance of the evidence which is
7 you that that doubt is the doubt that you would have when
8 the way it goes. Whose weighty evidence weighs just a
8 you're considering the most important affairs of your
9 little bit more than the other side? If it tips and
9 life.
10 balances this way in a civil case, that's the way you make
10
11 your decision, except here in America, in criminal cases,
11 have got to look at the situation and conclude that what
12 we have a different standard, if you will. In criminal
12 are some of the most important affairs of people's lives.
13 cases, we require that the government prove its case
13 Well, you know, buying a car is an important affair.
14 beyond a reasonable doubt. Now, I want to tell you a
14 Getting a job is an important affair. Buying a house is
15 little bit about reasonable doubt, give you some of the
15 an important affair. Getting married. But may I suggest
16 things that I think are important.
16 to you what it takes, what is perhaps the most important
17
17 affair in a party's life. Let me give you an example. We
You know, after all these lawyers sit down, the
Now, you have got to be -- that means that you
18 court is going to give you some instructions, and I really
18 all have children, or most of us, and may I suggest to you
19 think that it is going to be beneficial, and I have no
19 that important affairs are something like this: Suppose
20 doubt that you will do this, but the court is going to
20 your child is injured, is in the hospital and you have got
21 read off these instructions right here, and he's going to
21 to go down to that hospital and make certain decisions.
22 tell you the various things that you must consider in a
22 You make a decision is an arm cut off, do you make a
23 case such as this one.
23 decision to cut off an arm that has to be amputated. I
24
24 suggest to you that that is the caliber of things that are
Now, one of the points that he will cover with
25 you is this concept of reasonable doubt. Now, a
25 most important in life. What if a child -- what if you
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703
have to make a decision about whether a child lives or
chart right here. Did you see Vernie Kuglin get up and
2 dies. That, ladies and gentlemen, those types of matters
2 object when FedEx came in and said how much she made? Did
3 are the most important in life. And so in this situation,
3 we have any questions when Ms. White got up and said,
4 what you have to do is you have to look at the totality of
4 well, gee, this is what she owed? No, ladies and
5 the evidence, weigh it, consider the burden that the
5 gentlemen, that is not really a disputed element of fact
6 government has, must carry and make a determination. This
6 in this case.
7 is one of those most important affairs of your life. Just
7
8 like making a decision for a child, and you have got to
8 this case. The second element that the defendant
9 weigh this case and determine has reasonable doubt been
9 committed an affirmative act constituting tax evasion or
10 proven in this most important affair in the life of Vernie
10 attempted tax evasion. Well, to a degree, that is a
11 Kuglin.
11 disputed element, but what I want to discuss with you now
12
12 that I have this closing opportunity to kind of hit our
Now, what is it that the government must prove?
Let me tell you about the second element in
13 Well, the court has permitted me to tell you a few things
13 side of the case, is I want to discuss this last bottom
14 in advance of what the court is going to tell you. Now,
14 issue here, that the defendant acted willfully, meaning
15 perhaps this is a little light, I will try to improve it.
15 Vernie Kuglin as to each count acted willfully.
16 I have a copy here, I hope that you can see this good.
16
17 Now, in criminal cases -- you know, this is a tax evasion
17 you know, he has the right to do that, you know, he pulled
18 case, as I told you in opening, lawyers can kind of
18 out an excerpt from the jury instructions and -- you know,
19 catalog, courts kind of catalog things, and we call them
19 he pointed out, he kind of focused in on what the
20 elements. But what elements are, are facts. In order to
20 government thinks is important. Well, let me kind of put
21 find Vernie Kuglin guilty of Count 1 or Count 6, the
21 the whole thing into context and not just pull out a
22 government has got to go through for each count and prove
22 little part. What the court will be telling you about
23 very specific facts. The first fact that must be proven
23 this defense of good faith is this: If the defendant
24 is a tax deficiency. Well, ladies and gentlemen, let's go
24 acted in good faith, that is to say she actually believed
25 through this case, we didn't have any objections to this
25 the actions she took were allowable by law, then she is
Well, moments ago, Mr. Murphy got up here and,
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705
not guilty of the offense of tax evasion. It does not
are certain points of law that do support what she has
2 matter whether the defendant was right or wrong in her
2 done. First and foremost, she has the right to rely on
3 beliefs, nor does it matter if her beliefs make sense,
3 government documents. Doesn't it make sense that that is
4 sound reasonable to you, the jury, or to me, as the judge.
4 the law? I mean if you read something from the
5 The only thing that matters is whether or not the
5 government, shouldn't you be entitled to consider -- to
6 defendant actually believed she was correct in her
6 rely upon what the government has to say and even act upon
7 actions. That, ladies and gentlemen, that's the standard
7 it, and then when the government comes along and says, oh,
8 there for willfulness. Willfulness means, in essence, you
8 you have done something wrong, are you to be deprived of
9 got to know, Vernie Kuglin has got to know she was
9 saying, well, the government said this? No, that is a
10 required to file an income tax return. She has got to
10 very reasonable, it's an acceptable defense.
11 know that she had to pay income taxes, and with knowledge
11
12 of that duty, she deliberately and maliciously with evil
12 that we're asserting in this case is the species of this
13 intent, no, I'm not going to do that. What the government
13 overall good faith defense is this: The court will tell
14 has done here with this illustration, that excerpt out of
14 you that Vernie Kuglin is not presumed to know the law,
15 the jury instructions, is this: He has focused in on a
15 meaning that, as she sits here clothed with the
16 point that we don't deny, that you can consider the
16 presumption of innocence, as she sits here, you know, you
17 reasonableness of the defendant's belief in making a
17 got to look at her, well, the law -- she really doesn't
18 determination as to whether or not she actually believed
18 have any knowledge of the law, but she engaged in times in
19 them.
19 the fast, starting off in 1992 with this presumption that
20
Well, we have some very, very specific defenses
Now, there's even another aspect of the defense
20 she didn't know anything about the law, we know that
21 that have been asserted in this case, and the judge will
21 starting in 1992, she started a study of the law.
22 be telling you about it, but I think to need to in advance
22
23 tell you about them right now. We contend Ms. Kuglin did
23 entirely reasonable. You can rely upon what you read in
24 not act willfully, that she does, in fact, have a good
24 the law and you can rely on what the government documents
25 faith defense. And the reason why we say that is there
25 have to say. Now, that, ladies and gentlemen, reliance on
Now, that study of the law, I think, is
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707
those government documents as well as, you know, don't
appreciate, just from our own knowledge, common knowledge
2 presume some other aspect of the law and clothe her with
2 that this is just the beginning, that there are manuals,
3 that presumption that she knows such. The only thing she
3 there are books, that there is everything else in the
4 can really know is what she told you about in this
4 world dealing with this incredibly complex law.
5 courtroom.
5
6
6 every other American, what law requires her to do
Now, I want to -- I want to go, if I can, to
Now, Ms. Kuglin has this question, as does
7 the particulars of her specific arguments. One was this
7 something. Well, that's what is talked about in the
8 argument about liability. Is this some concocted,
8 Privacy Act. And here we know for a fact that the
9 something drawn out of the air argument? Well, I just
9 government, the IRS complies with the Privacy Act, because
10 happened to grab real quick Exhibit Number 36, which
10 in this Exhibit Number 36, there's a Privacy Act
11 incidently is the 1975 federal income tax form. You know,
11 notification. What does the IRS itself say about the laws
12 the front and the back of a Form 1040 instruction booklet
12 that require someone to submit a return? Let me kind of
13 that belongs to her, but Ms. Kuglin, you know, she
13 blow this up a little bit.
14 testified during her testimony that she was reading,
14
15 she -- you know, she came to some knowledge, some
15 minute?
16 appreciation of this thing known as the Privacy Act, and
16
THE COURT: You may.
17 to her, you know, her belief about the Privacy Act is
17
18 this: It's a -- it sounds like it's a reasonable law if
18 bench.)
19 it doesn't exist, but she thinks that it does exist.
19
20 Government agencies should tell people what laws requires
20 counsel's closing, but he's arguing the law. I'm not
21 them to do something, particularly if it is submit
21 hearing what Ms. Kuglin believed. He's arguing about what
22 information.
22 the law is. I don't think he can get do that.
23
23
Now, ladies and gentlemen, look at this big
MR. MURPHY: Judge, can we approach for a
MR. MURPHY: Judge, I hate to interrupt defense
MR. BECRAFT: I was just getting ready to get
24 thick thing. Nobody disputes this is the Internal Revenue
24 into a very specific exhibit.
25 Code. And don't you know -- I think we can all
25
THE COURT: I'm going to tell them what the law
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709
is. I think that's probably what we need to do.
and 6011 of their regulations.
2
MR. BECRAFT: Can I take care of it, Judge?
2
3
MR. MURPHY: Sure, sure.
3 according to Ms. Kuglin, are the two laws that require her
4
MR. BECRAFT: I will do it.
4 to file a return. Did we not have in this case, I
5
5 think -- Mr. Murphy, correct me if I'm wrong, but I think
Now, we know that from this document what,
6 that Mr. Murphy and Ms. Kuglin were yesterday afternoon
6 court.)
7
THE COURT: Wait just a second. Thank you.
7 engaged in reading of the code. And I recall that the
8
MR. BECRAFT: You know, I started off in this
8 words that both of them spoke on that occasion were
9 case, and I said, I think I did in opening, and we did it
9 something to this effect, that the law -- these two laws
10 when Ms. Kuglin was on the stand, I want to restate it
10 right here or their beliefs about the law, you know, it
11 right now, you know, we started off this case, and the
11 applies to persons liable just like that statement says,
12 court said -- told y'all that what the witnesses say and
12 those who are liable for tax. Now, let's step into Vernie
13 what the lawyers say is not the law, and what I'm telling
13 Kuglin's mind. She engaged in this study and she did not
14 you right now is really the facts and beliefs about the
14 find that when she looked at the laws that require the
15 law. But don't take -- you know, if you were -- if I slip
15 submission of returns, it didn't say something like, you
16 up, like Ms. Kuglin did and say, oh, this is the law,
16 know, everybody making so much money is required to file a
17 you're to get the law from the court rather than me,
17 return. If you use these terms of art, I think the exact
18 you're to get the facts from her.
18 testimony she gave, terms of art every person liable, and
19
19 that prompted her to engage in a study of the code, and
Now, that having been said, let me get back to
20 what the government said in this particular exhibit. Look
20 she went through here and, sure, she used this index, she
21 down there, it says -- page two, bottom left-hand
21 pulled out this book that she got in 1994, she told you
22 corner -- the Internal Revenue Code requires every person
22 she studied the index, and she looked at the section of
23 liable for any tax imposed by the code to make a return or
23 the index that said liability for tax, and she starts
24 statement according to the forms and regulations
24 looking at all these other taxes and sees provisions in
25 prescribed by the Internal Revenue Service, Section 6001
25 the Internal Revenue Code, if you do something here, you
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711
know, you're liable for the tax or, you know, there's
are liable, and the only section I find is -- the only
2 other sections making someone liable, and so Vernie Kuglin
2 section that I find of someone being liable is this
3 comes to the position, that, you know, I need to find the
3 nonresident aliens or foreign corporations.
4 sections of the code, the Internal Revenue Code in
4
5 reference to the income tax whereas Congress has used the
5 shows that she didn't believe that. Now, we do have --
6 words somebody is liable for a tax. Because Vernie Kuglin
6 the government wants to try to make a big point about
7 said you're only required to file a return if you are
7 these letters coming from the government. You know, we
8 liable. And so she sits down and she takes that index,
8 have got one letter here, if I can go ahead and address it
9 finds one section that makes somebody liable for the
9 that the moment -- we have got this letter here in October
10 filing of or makes somebody liable for the federal income
10 of 1995 when Ms. Kuglin got around to asking the
11 tax. nonresident aliens and foreign corporations. Now,
11 government some -- asking the government some questions.
12 there wasn't any testimony that -- I didn't hear it, the
12 Let me go ahead and flip it up on the screen. This is the
13 government had the opportunity to prove one other section
13 first letter that she wrote to the IRS. It is Exhibit 41.
14 of the code what makes someone liable, that didn't happen.
14 It is dated October 18th, 1995. It sets forth some
15 And also, Ms. Kuglin, my recollection is, that during an
15 positions down here, and let me just tell you, you read
16 exchange with the government on cross examination, Ms.
16 these parts of this letter right here, you can see that
17 Kuglin said, well, you know, I engaged in a search, a
17 Ms. Kuglin didn't invent anything about this Paperwork
18 computer search for the word liable in the income fax
18 Reduction Act argument. You know, she is mentioning 0067.
19 sections of the code and I still only came up with that
19 You know, she is mentioning the Paperwork Reduction Act.
20 one section.
20 She is mentioning individual income tax 1.1-1, she knows
21
21 about this stuff. But what Ms. Kuglin did is she didn't
Now, ladies and gentlemen, what we have right
Now, there's nothing in this evidence that
22 here is a fundamental problem. You know, Vernie Kuglin,
22 invent something here. We know that, you know, this
23 presumed not to know anything about the law, starts her
23 document right here shows that the IRS received this
24 studies by '93 and '94 and '95, and she has reached the
24 letter, IRS, P. O. Box -- I can't read it, Memphis,
25 conclusion filing returns applies to those parties that
25 Tennessee. It was received November 13th, 1995, the IRS
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THE COURT: Ladies and gentlemen, there's some
got this letter. It asks simple questions. I want to
2 know, says Ms. Kuglin, the statutes and implementing
2 subjects that are very sensitive in our society. One is a
3 regulations that require me to file a return, the statutes
3 reference to religion. It is inappropriate for an
4 and implementing regulations which specifically designate
4 attorney on any side to refer to a deity and to make
5 the exact tax for which I am liable. You know, I think
5 comparisons with any other entity in a negative or
6 here in America, American people have the right to ask the
6 positive way. We're here to decide this case on the facts
7 government questions. You know, to say the American
7 and the evidence and the law. I'm going to ask you to
8 people cannot -- you know, I think even the Bible says you
8 disregard the comments by counsel about God and the IRS.
9 can ask God questions. And I don't think that the IRS is
9 I say that in appropriate respect to our separation of
10 greater than God. And I think it's perfectly logical --
10 powers of the First Amendment. You shouldn't consider
11
11 that at all.
12
THE COURT: You may.
12
13
13
But it just makes sense that American people
14 bench.)
14 ought to have the right to ask questions of government.
15
15
MR. MURPHY: Judge, I'm going to object. This
Now, the prosecution's position is that once
16 is an improper argument. That stuff about the IRS isn't
16 Ms. Kuglin asked these questions, about a month later --
17 greater than God, he's just --
17 take a look at exhibit number --
18
MR. BECRAFT: Okay, I won't do it again.
18
THE CLERK: Is your microphone on?
19
MR. MURPHY: He's appealing to the prejudices
19
MR. BECRAFT: No, it's not. I turned it on
20 of the jury.
20 now. Take a look at Exhibit Number 42. Oh, that other
21
21 exhibit was October 18th of '95; this is -- what does it
THE COURT: I think it is an appeal to
22 prejudice. I'm going to tell the jury it is an appeal to
22 say? November 25th of '95. Here again, Ms. Kuglin is
23 prejudice and they have to disregard it.
23 asking questions. I don't think we need to necessarily
24
24 look at them all right now, but, again, I direct your
25 court.)
25 attention to the second page, compare the questions she
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715
THE COURT: That's beyond the scope of the
asked on the first exhibit and look at this one, and she
2 is again asking the same questions. I think this one has
2 proof in the case. Objection has to be sustained.
3 a couple of more questions that are being asked. Well,
3
4 the government wants you to think that someone --
4 gentlemen, is that you can examine those letters, and they
5 certainly has the right to ask questions -- was --
5 do not constitute a reply to the questions of Vernie
6 received a reply by means of this series of letters here
6 Kuglin. That happened back in 1995, and this controversy
7 from the IRS. You know, I guess if you ask a question of
7 has rolled on and Ms. Kuglin has gone through '96, '97,
8 government and you get some paperwork back from them again
8 '98, '99, 2000, 2001, 2002, maybe up throughout this trial
9 and it doesn't answer your questions, the government's
9 without having received a reply from the government. And
10 suggestion is that you're under some type of requirement
10 to say that in a situation like this that an American is
11 to fold, you know, you don't need to insist any more that
11 culpable, criminally culpable, that you have acted with an
12 you get an answer to your question. Yet, Vernie Kuglin's
12 evil intent, that you really didn't believe these things
13 questions are critically important. Right or wrong, she
13 and you acted willfully just simply does not match the
14 has the right to try to ask questions of government and
14 facts of this case.
15 insist on an answer.
15
16
16 The government mentions some of these -- the age of some
Now, examine -- you know, I don't know all the
MR. BECRAFT: The point I make, ladies and
Let me move on to a couple of other documents.
17 exhibit numbers right here, but they're sitting right up
17 of these cases, these documents that are used. You know,
18 here, and those letters that you got back, does the IRS
18 the government casts aspersions upon a statement by a
19 answer a single question she posed? In November of 1995,
19 government official appearing in Exhibit 28, Mr. Dwight
20 there was the opportunity for the government to come
20 Avis, making a statement. You see where my finger is?
21 along, the IRS to come along and answer those questions,
21 Let me point this out to you now. Your income tax is one
22 and if that had happened, ladies and gentlemen, may I
22 hundred percent voluntary tax and your liquor tax is one
23 suggest --
23 hundred percent enforced tax. Now, ladies and gentlemen,
24
24 words, words, something like this, you present to an
MR. MURPHY: Judge, Judge, he's speculating
25 now, and I submit he can't do that.
25 ordinary American like her, an airline pilot, and it has a
718
717
certain meaning, and Americans are not presumed, she is
comes from the government that had an impact upon her
2 not presumed to know the law, but you can't presume what
2 belief. And there's -- its age doesn't mean anything. It
3 she -- what type of conclusion she is supposed to reach
3 is offered to prove that she believed what the government
4 from that. You know, the government makes much of the
4 had to say. Read the document here. It is talking about
5 fact that she's a pilot. Well, she is not a lawyer,
5 nonresident aliens filing Form 1040.
6 ladies and gentlemen. Well, I'm a lawyer. There's no way
6
7 I can climb into, I guess, a 757 and push down that
7 roll into at this stage the Paperwork Reduction Act
8 throttle and take off out here at the airport. I don't
8 argument. Let's take a look at a document right here that
9 think we need to compare Vernie Kuglin to a lawyer. I
9 she found very, very important. Look at this, this is
10 think we need to take into consideration what the facts
10 Form 2555, it is named foreign earned income, and it has
11 are, that she is a pilot trying to learn a little bit
11 this OMB control number up here, you can take this back to
12 about the law. So, you know, Vernie Kuglin has told us
12 the jury room and look at it. Now, take a look at this
13 that this statement here has some significance for her.
13 and ask yourself a question, can someone, from government
14 She has told us that, you know -- and we're not saying,
14 documents, reach a conclusion different from a lot of
15 and I don't think the evidence supports this proposition
15 people? Well, I suggest to you that that is not only
16 that Vernie Kuglin was down there at Memphis State, down
16 possible, it did here in this situation. Vernie Kuglin,
17 there at the law library on Central spending oodles of
17 having a copy of the Internal Revenue Code, knows what
18 time going through those books. She told us that what she
18 Section 1 of the Internal Revenue Code deals with. There
19 was doing was she was getting references from cases from
19 could be no question about that, because that was a matter
20 the things that she read. She was talking to people and
20 that Mr. Murphy covered with her specifically that read
21 finding documents, and while I don't think that there was
21 from the code. What Ms. Kuglin was intrigued by is
22 any specific testimony about -- you know, she did read
22 something entirely different. She found that it seems
23 this document here Treasury Decision 2313, she read it
23 only logical to her -- and see this number right here,
24 before April of 2000 -- April of 1996. But, you know,
24 this 1.1-1? You know, that's not an invention on the part
25 it's a document that she did read. It is a document that
25 of Ms. Kuglin, because I think that she is especially
Ms. Kuglin went a step further. Let me kind of
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719
stating it -- I'm going to refer back to Exhibit Number 41
wrong, that's not really the issue in this case. The
2 right here, correct me if I am wrong, but I see that this
2 question is did she believe it, right or wrong, and if she
3 document says, flat out, it's talking about Form 2555,
3 believed it, it's your obligation to conclude that she did
4 foreign earned income, and she is talking about 1.1-1, and
4 not act with that criminal state of mind, which is
5 this is no invention on her part because she mentions it
5 essential for you to convict her on any count in the
6 in a letter to the IRS dated October 18th of 1995. So to
6 indictment.
7 explain to you, the jury, how she reached these
7
8 conclusions, we offer an official government document.
8 a lot of the points that need to be covered here, but
9 Now, there wasn't any testimony that Ms. Kuglin acquired
9 there's one final thing that I need to point out to you.
10 this document in any other way than what she has already
10 You know, Ms. Kuglin said she is a member of the
11 told you, people tell her things. She checks it out and
11 Libertarian party. I think it is kind of common knowledge
12 goes and gets information. She knows -- she said we had a
12 that the Libertarians, they believe in the rights --
13 little -- we were wondering about how to express it in
13
14 clear language for the benefit of the jury yesterday, but
14 counsel's comment.
15 I think I asked a question, you know, I used the term
15
MR. BECRAFT: I will withdraw that.
16 implementing regulations, but Ms. Kuglin, I think she
16
THE COURT: I think that is outside the proof.
17 concludes, she said this is the regulation that matches
17 We know she is a member, but that's about it.
18 and supports Section 1 of the Internal Revenue Code. And
18
19 to her, the document that is required to be filed in
19 the totality of what she -- who she is, that she is
20 reference to meeting the requirements of Section 1 of the
20 someone that really is committed to this proposition, you
21 Internal Revenue Code is this document that has that 0067
21 know, I -- how many of us have sat down and listened to a
22 OMB control number on there, which is Form 2555.
22 tape series on the Constitution, Democracy in America,
23
23 Common Sense, Text of the Constitution, Bill of Rights? I
Now, that's odd, people. It's real odd. But
I want to move on to -- I think I have covered
MR. BECRAFT: There can no doubt, once you take
24 the question I want to present to you is, where is it
24 think we all know what the Bill of Rights does is it
25 shown that Vernie Kuglin did not believe that? Right or
25 protects rights. We have got a lady here that listened to
722
721
tapes on the Bill of Rights. Is it something that you
for with reference to powers of taxation. She told you
2 denigrate her for, for trying to protect rights? Well,
2 about the old -- the history of the taxing provisions of
3 this gets back around to the most fundamental question in
3 the United States Constitution. She told you about that
4 this case. The most fundamental question in this case
4 Pollock case. She told you about the 16th Amendment. She
5 centers upon what Ms. Kuglin learned regarding the -- you
5 told you about the Brushaber case. The Brushaber case
6 know, the nature of the federal income tax here in
6 says, oh, in a constitutional sense, the federal income
7 Tennessee. She read this case, Jack Cole against
7 tax is an excise tax.
8 McFarland, it had a direct relationship to her beliefs
8
9 about the federal income tax. You know, she testified
9 is talking about, you know, constitutional things, those
10 that she believed that the federal income tax was an
10 are kind of permanent, and, you know, the mere fact that
11 excise tax. Is that something that is concocted out of
11 long ago in legal history there was this case before 1920
12 thin air? I would suggest to you it is not concocted out
12 that described in a constitutional sense the federal
13 of thin air, and the reason for that is that if you take a
13 income tax as being an excise tax, I don't suggest that
14 look at Exhibit Number 17, which is the 1995 Form W-4, you
14 its ages makes it irrelevant like the government does. I
15 will look through this documents, and one of the cases
15 would suggest that the age of a case is indicative of its
16 that she talked about in her testimony was this Brushaber
16 wisdom.
17 case, an exhibit, document provided to her employer,
17
18 nobody doubts it was signed, you know, 12-30 of '95. The
18 Kuglin found real important, Jack Cole versus McFarland,
19 attachments, the exhibits that are attached to this
19 here you can see it on the screen, it is Exhibit Number
20 document, it says there, it says Brushaber versus Union
20 35. I merely direct your attention to what I -- what
21 Pacific. Read the sentence here. It says taxation of
21 appears to be a very important point made by the Tennessee
22 income is in its nature an excise case. Right there.
22 Supreme Court in 1960. Realizing and receiving income or
23 Brushaber, Union Pacific, an excise. That's what Vernie
23 earnings is not a privilege that can be taxed. Now, when
24 Kuglin believes. She described for you about her beliefs
24 you're dealing with constitutional questions, as Ms.
25 about what the Constitution of the United States provides
25 Kuglin did, you know, it -- it just seems natural that you
Now, ladies and gentlemen, I think when a court
Let me talk about this one case here that Ms.
724
723
would accept without question, well, the Supreme Court of
question to the government, what makes me liable for the
2 the United States says it's an excise tax, and it just
2 federal income tax. She did a computer search looking for
3 seems so natural for someone to have the United States
3 the word liable or tried to find a statute liable. Well,
4 Supreme Court -- I mean the Tennessee Supreme Court say an
4 the only thing that you can surmise from all of this is
5 excise tax, can't be used to tax -- or you have a natural
5 that, well, gee, the law appears to -- or at least her
6 right of receiving and realizing income, and cannot an
6 belief is that the law appears to impose a requirement on
7 American like her read these documents? She is not a
7 people who are liable, and then just kind of have this
8 lawyer that's going to go down and do tons and tons of
8 Section 6012 dangling out here and having no connection to
9 research. She is going to read these basic things and
9 being made liable. Now, that's -- that's Vernie Kuglin's
10 reach certain conclusions. Is she not entitled to rely on
10 beliefs.
11 these documents? I would suggest that she is.
11
12
12 professor. She is not a lawyer. She has just simply
Now, one final point that I think I need to
Now, she is a pilot. She is not a tax law
13 address right here is Mr. Murphy brought in -- he held up
13 honestly sat down and examined the tax laws, found some
14 a big thick book yesterday. He pointed out in his
14 conflicting things. She has read certain information that
15 arguments in closing, he points to this Section 56 -- I
15 reaches her -- that causes her to reach certain
16 mean Exhibit 56, 1.6012-1, you know, which I guess the
16 conclusions, and the government hasn't really established
17 jury probably knows enough about this to determine that
17 any type of a case that she did not believe these things.
18 this is an income tax regulation. Look at it from Ms.
18
19 Kuglin's viewpoint. She looked at these provisions of the
19 indications from the government or suggestions that all of
20 code. She has looked at these things like this, and what
20 this stuff was recently invented, which is simply not the
21 she is looking for is what makes me liable. I want to see
21 case, because the very documents that have been offered
22 where Congress has made me liable. Congress knows how to
22 into evidence show that she was talking about this stuff
23 make someone liable. They did so with that Section 1461,
23 before the years covered by the indictment. It's not an
24 according to her beliefs. Nonresident aliens and foreign
24 invention. The totality of this case is this: Vernie
25 corporations. She is looking for one -- that was her
25 Kuglin does her studying. In the fall of '95, she writes
In closing arguments, there has been
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725
MR. BECRAFT: I'm going to tell the jury that
two letters to the IRS. I think they're Exhibits 41 and
2 42, get them and read them, poses the questions to the
2 the jury is the fourth branch of government that makes the
3 IRS, what statute makes me liable, and gets no direct
3 decisions in criminal case --
4 answer. Presume her to be wrong, is being wrong criminal?
4
MR. BERNHOFT: Basic civics.
5 And I want to get back to what I did when I had my opening
5
MR. BECRAFT: It's not a nullification
6 statement up here, I just want to grab this and throw this
6 argument, Your Honor.
7 down one more time. Tax evasion is not committed by
7
MR. MURPHY: Oh, yes, it is, Judge.
8 reading the law and relying on the government. This is
8
MR. BECRAFT: I'm going to say you represent
9 good faith.
9 the judiciary, he represents the executive branch, that
10
10 code is the work product of Congress, but there is a
Ladies and gentlemen, that right there is the
11 reason why I contend that Vernie Kuglin is not guilty of
11 fourth branch of government, it's them.
12 tax evasion.
12
13
13 government. If there is, it's not the jury. The jury is
Now, I want to address one final point that
THE COURT: There's not a fourth branch of the
14 relates to your duties as jurors. You know, we're all
14 part of the judicial system, so they're part of the -- if
15 familiar with the fact that in America, we have got three
15 they're part of any branch, they probably -- they're part
16 branches of government. May I make a suggest that the
16 of the third branch.
17 truth of the matter is that there are four branches of
17
18 government?
18 branch.
19
19
20
THE COURT: You may.
20 media, if we wanted to talk about sort of -- have a
21
21 discussion about how things work, but the jury is part --
MR. BECRAFT: I won't call them the fourth
THE COURT: The fourth branch is the press and
22 bench.)
22 I will tell them right now if you want me to, they're part
23
23 of the function of the judicial branch. I think that's
MR. MURPHY: Judge, it sounds like we're
24 heading into a nullification argument, and I object that
24 right.
25 there are not four branches of government, there's three.
25
MR. BECRAFT: I won't get into that, Judge, and
728
727
I won't label them a branch of government. What I'm
have a seat until they come out.
2 leading up to is what their function is. They're going to
2
3 take this contested case.
3
THE COURT: You may be seated. Mr. Becraft,
4
4 you may proceed.
THE COURT: They're part of the functioning of
5 the judicial branch in administering the law. I mean
5
6 they're paid by the judicial branch. They're drawn by the
6 and gentlemen, I've just about wrapped everything up.
7 judicial branch. I mean they are part of the judicial
7 I've got a few concluding remarks. You know, in a
8 branch.
8 criminal case here in America, what we do is -- and I
9
9 talked about that burden that is imposed upon the
MR. BECRAFT: I'm not unaware. I was
10 colloquially expressing them as being the fourth branch of
10 government. Well, to enable the government to meet its
11 government.
11 burden, in closing arguments, this is the structure, the
12
12 government gets to open, the defense gets up to give its
THE COURT: I think -- I think it is an area
13 that we best avoid.
13 say, and then there is -- what's left over is the rebuttal
14
MR. BECRAFT: Okay.
14 argument that the government can make. In a few moments,
15
15 Mr. Murphy is going to get up here and address some of the
16 things that I said, but please remember that I won't have
16 court.)
17
THE COURT: We're going to take a restroom
17 any opportunity to get up here and engage in surrebuttal
18 break, and it will be -- we're going to take our 15-minute
18 and point out some of the things that he points out to you
19 break at this time. When we come back, we will conclude
19 in a few moments. I simply ask something of you, you
20 the argument from defense counsel, we will have a short
20 know --
21 rebuttal argument, and then we will have the instructions.
21
22 Thank you.
22 All the jury has got to be asked to do is follow the law.
23
23
24
24 ask is that they think about what the counter position has
25
They should be here in just a second. You can
25 been. I think that's all you're going to say, is that
MR. MURPHY: Judge, Judge, I'm going to object.
THE COURT: Well, I think the normal thing to
730
729
right, Mr. Becraft?
about the facts, and what you do when you come back into
2
2 this jury room is to tell us what your collective judgment
MR. BECRAFT: You anticipated where I was
3 going, Your Honor.
3 is.
4
4
THE COURT: I have been here before, and that's
And I want to make this one final comment about
5 a pretty -- we ought to let you make that argument, so I
5 what you do when you exercise this activity of
6 understand the reason for the objection, but I think we
6 deliberations in trying to reach that collective judgment,
7 have resolved it by the discussion.
7 please consider the facts. Please consider that the
8
8 government has the burden of proving beyond a reasonable
MR. BECRAFT: When you get back there in that
9 jury room, let me tell you when Mr. Kuglin's presumption
9 doubt. Please consider that the decision that you make is
10 of innocence will leave. You know, during a trial, the
10 one of the most important that you make in your life, and
11 parties can look at the jurors, and you don't know what is
11 it is the most important you're making in the life of
12 going through their minds, maybe somebody is accepting our
12 Vernice Kuglin. So when you get back there, please
13 position, maybe somebody is not accepting our position.
13 consider the evidence.
14 You know, it's obvious that jurors in any type of case,
14
15 and particularly a criminal case, there's going to be
15 take into consideration the facts that support our side of
16 differences of opinion, and you may have certain leanings
16 the case. Here in America, our criminal justice system is
17 at this stage one way or the other, I don't know what they
17 dependent upon us bringing in 12 people to try the true
18 are, but I think that's a fair statement to make. What
18 members of our community and to decide disputed facts.
19 will happen from this point forward is that after he gets
19 There are disputed facts in this case. But I would
20 the rebuttal and after the court gives you the applicable
20 suggest to you that once you weigh those disputed facts,
21 jury instructions in this case, which since I mentioned
21 take into consideration the old scales of justice, take
22 it, I do want to tell you, please listen very closely,
22 into consideration the government's burden of proof beyond
23 once you go back in that jury room, then what you will be
23 a reasonable doubt. And consider it as the most important
24 about is making a collective judgment, 12 of you will get
24 thing that you do in your life. When you take that into
25 together and you'll express your opinions, you'll talk
25 consideration and consider all the facts in this case,
If you hear something from Mr. Murphy, also
REBUTTAL ARGUMENT BY MR. MURPHY
732
731
there is but one conclusion that can be reached, Vernie
2 Kuglin did not willfully commit tax evasion for the years
2
3 '96, '97, '98, '99, 2000 and 2001, and the only fair and
3 allowed a brief period of time for rebuttal. We get back
4 just verdict to return in this case is not guilty on all
4 to the same thing. This case turns on the good faith
5 of those counts. Thank you, ladies and gentlemen.
5 defense and what constitutes good faith.
6
6
THE COURT: Mr. Murphy.
Ladies and gentlemen, at this point, I'm
Now, just a couple of things. In the proof
7
7 yesterday, Ms. Kuglin said she went to the Memphis State
8
8 library, law library, had access to all this stuff. There
9
9 are several important things, the Jack Cole case, it's in
10
10 evidence, you can read it. I urge you to look through it,
11
11 see if there's one mention of the federal income tax code.
12
12 You're going to -- the judge is going to tell you that you
13
13 can rely on the decisions of the U. S. Supreme Court.
14
14 This is not a United States Supreme Court case. This is
15
15 another example of tiptoeing through the tulips. This
16
16 helps her. Look at all this material she submitted on
17
17 voluntariness, you're going to see references in there,
18
18 and in every case the collection efforts, enforcement
19
19 efforts, she goes in and she picks out a sentence and
20
20 takes it out of context, tiptoeing through the tulips.
21
21
22
22 requirements about paying the tax, filing returns. They
23
23 talk about penalties, tiptoeing through the tulips, the
24
24 stuff about the OMB, you know, I was reading it for that,
25
25 not this other stuff. She ignores anything that
The form books we put in, look there. They got
734
733
undermines her argument. Now, we're not claiming that
know, Mr. Becraft makes this lady that's an airline pilot
2 this was recently invented. She has been doing this for
2 sound like some kind of innocent -- she is not a lawyer,
3 years. What our position is, ladies and gentlemen, is
3 she is not a lawyer. Well, look at those letters.
4 that it is not in good faith. Ask yourself, a good faith
4 There's a jillion legal citations in there, ladies and
5 belief, what is it based on? No federal cases other than
5 gentlemen. You know, she knows enough law to say -- to
6 that Flora case prior to maybe 1914. Just because a case
6 form a belief that she doesn't have to file because of the
7 is old doesn't make it wise. That just means it is an old
7 problem with the OMB number, but there's an OMB number on
8 case. Didn't do any recent research, evidently. But now
8 the 1040, and it's in that list she talks about. What is
9 she knows the tax code, and the defendant stood up here
9 kind of interesting about the list is here is another
10 and told you about her belief that she couldn't find
10 example of tiptoeing through the tulips. You go to the
11 anything that required her to file a 1040 or file a tax
11 list, she goes to the first one, and she says I don't -- I
12 return or pay tax. Well, section one, which she admitted
12 don't see the number. Well, that number for the
13 she knew of years ago was aware of it, says, according to
13 individual tax income return, the 1040, it's on this whole
14 her testimony, there is hereby imposed on the taxable
14 list all over the place. And this doesn't say citation of
15 income of every individual a tax determined in accordance
15 the tax code up here. It says 26 CFR part of section, not
16 with the following table. Tiptoe through the tulips,
16 tax code, not United States Code, CFR. Tiptoe through the
17 ignore that. You got a copy of 26 Code of Federal
17 tulips. Well, you know, I read this. Is this good faith?
18 Regulations 601-21-1, individuals required to make return
18 Does this sound like good faith? I would submit it is
19 of income. She knew about this for several years. This
19 not, ladies and gentlemen.
20 document says you got to make a return on a 1040 if you
20
21 have more than certain income. Tiptoe through the tulips,
21 Look at all these letters she got from the IRS. Now, how
22 this doesn't apply to her.
22 could you say in good faith that after you got all these
23
23 letters that I didn't believe, you know, I had to file?
Now, is it reasonable to believe that she
One other thing, and I'm going to sit down.
24 concluded she didn't have to pay income tax or file income
24 After they're levying against you. If she believed this
25 tax returns? Look at the letters they submitted. You
25 in good faith, why the bogus W-4s, why did she never ask
736
735
for a return of the prior taxes? That was the defendant's
this section? Oh, it doesn't appear to me. The section
2 testimony. She has never asked for a refund of those tax
2 that says you shall pay your tax, it doesn't apply to me.
3 monies. Never. Now, if you believe it in good faith, why
3 What about this section where it says you shall make a
4 not, why wouldn't you want to do that? Why would you
4 return? Well, it doesn't apply to me because shall
5 strip the money out of your bank account every payday? I
5 doesn't mean shall. Does that sound reasonable?
6 submit you do that because you know you violated the law
6
7 and you know that the IRS is going to come after your
7 the defendant's position is so ridiculous that it can't
8 money. This case turns on your estimation of the good
8 constitute a reasonable position. And you can determine
9 faith. I would submit, ladies and gentlemen, that there
9 the reasonableness of it in making your judgment about
10 isn't good faith. They can't have it both ways. She
10 good faith.
11 can't be an airline pilot that makes -- that in six years
11
12 has made over a million dollars, in six years has beat the
12 now, but I submit that if you go back in that jury room
13 government out of $259,507.64 in income tax, but she's an
13 and you look at all the evidence and you consider her
14 idiot when it comes to the law. The question is not
14 position that you're going to come to the conclusion that
15 whether she was a lawyer, but did she have good faith, and
15 this was a scheme to evade tax, that she didn't like
16 what you saw through her testimony, and we can -- the
16 paying tax, she didn't like the way the code was written
17 government can rely on her testimony in order to meet its
17 and that she is guilty of each count of this indictment.
18 burden of proof beyond a reasonable doubt was somebody who
18 Thank you, ladies and gentlemen.
19 selectively ignored things that hurt her position, that
19
20 undermined her position. Tiptoe through the tulips. If
20
21 it helps me, if it is a 1916 decision that helps me, I
21
22 found it, that's the law. If it is the code, if it is the
22
23 instruction booklet, the most basic thing that hurts me,
23
24 well, no, I didn't know about that or it doesn't apply to
24
25 me. It is like a dog chasing its tail. Well, what about
25
I would submit that based on the evidence that
Ladies and gentlemen, I'm going to sit down
JURY INSTRUCTIONS
JURY INSTRUCTIONS
738
737
THE COURT: Now, ladies and gentlemen, it is
any evidence at all. The government has the burden of
2 now my duty to instruct you on the law that applies in
2 proving the defendant guilty beyond a reasonable doubt as
3 this case. When I finish, you will go to the jury room
3 to each charge in the indictment, and if it fails to do
4 and begin your discussions, what we call your
4 so, you must find the defendant not guilty of the charge
5 deliberations. Of course, you're going to have a full set
5 that you are considering.
6 of these statements, so you won't really need to take any
6
7 notes now. You will have all of the materials in front of
7 strict or heavy burden, it is not necessary that a
8 you.
8 defendant's guilt be proved beyond all possible doubt. It
9
It will be your duty to decide whether the
While the government's burden of proof is a
9 is only required that the government's proof exclude any
10 government has proved beyond a reasonable doubt the
10 reasonable doubt concerning a defendant's guilt.
11 specific facts necessary to find the defendant guilty of
11
12 the crimes charged in the indictment. You must make your
12 reason and common sense after careful and impartial
13 decision only on the basis of the testimony and other
13 consideration of all of the evidence in the case.
14 evidence presented here during the trial, and you must not
14
15 be influenced in any way by either sympathy or prejudice
15 proof of such a convincing character that you would be
16 for or against the defendant or the government.
16 willing to rely and act upon it without hesitation in the
17
17 most important of your own affairs. If you are convinced
You must also follow the law as I explain it to
A reasonable doubt is a real doubt based upon
Proof beyond a reasonable doubt, therefore, is
18 you whether you agree with that law or not, and you must
18 that the defendant has been proved guilty beyond a
19 follow all of my instructions as a whole. You may not
19 reasonable doubt, say so. If you are not convinced, say
20 single out or disregard any of the court's instructions on
20 so.
21 the law.
21
22
22 evidence that I have admitted in the case. The term
The indictment or formal charge against the
As stated earlier, you must consider only the
23 defendant is not evidence of guilt. Indeed, the defendant
23 evidence includes the testimony of the witnesses, the
24 is presumed by the law to be innocent. The law does not
24 exhibits admitted in the record and any facts of which the
25 require the defendant to prove her innocence or produce
25 court has taken judicial notice. Remember, that anything
JURY INSTRUCTIONS
JURY INSTRUCTIONS
740
739
the lawyers say is not evidence in the case. It is your
for each one, for each charge. You must decide whether
2 only recollection and interpretation of the evidence that
2 the government has presented proof beyond a reasonable
3 controls. What the lawyers say is not binding upon you.
3 doubt that the defendant is guilty of that particular
4
4 charge.
In considering the evidence, you may make
5 deductions and reach conclusions which reason and common
5
6 sense lead you to make, and you should not be concerned
6 whether it is guilty or not guilty, you should not be
7 about whether the evidence is direct or circumstantial.
7 influenced by your decision on any of the other charges.
8 Direct evidence is the testimony of one who asserts actual
8
9 knowledge of a fact, such as an eyewitness.
9 judicial notice of the fact that Memphis, Shelby County,
10 Circumstantial evidence is proof of a chain of facts and
10 Tennessee is located in the Western District of Tennessee.
11 circumstances indicating that the defendant is either
11 Since you are the fact-finders in this case, you may, but
12 guilty or not guilty. The law makes no distinction
12 you are not required to accept even this fact as
13 between the weight that you may give to either direct or
13 conclusively established.
14 circumstantial evidence.
14
15
15 the evidence, I do not mean that you must accept all of
Also, you should not assume from anything that
In reaching your decision on one charge,
You are instructed that the court has taken
Now, in saying that you must consider all of
16 I may have said or done that I have any opinion concerning
16 the evidence as true or accurate. You should decide
17 any of the issues in this case. Except for my
17 whether you believe what each witness had to say and how
18 instructions to you, you should disregard anything that I
18 important that testimony was. In making that decision,
19 have said in arriving at your own decision concerning the
19 you may believe or disbelieve any witness in whole or in
20 facts.
20 part. Also, the number of witnesses testifying concerning
21
The defendant has been charged with six crimes.
21 any particular dispute is not controlling. You may decide
22 The number of charges is no evidence of guilt, and this
22 that the testimony of a smaller number of witnesses
23 should not influence you in your decision in any way. It
23 concerning any fact in dispute is more believable than the
24 is your duty to separately consider the evidence that
24 testimony of a larger number of witnesses to the contrary.
25 relates to each charge and to return a separate verdict
25
In deciding whether you believe or do not
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believe any witness, I suggest that you ask yourself a few
memory or an intentional falsehood, and that may depend on
2 questions. Did the person impress you as one who was
2 whether it has to do with an important fact or with only
3 telling the truth? Did the witness have a particular
3 an unimportant detail.
4 reason not to tell the truth? Did the witness have a
4
5 personal interest in the outcome of the case? Did the
5 talked with you about the credibility or believability of
6 witness seem to have a good memory? Did the witness have
6 the witnesses, and I suggested some things for you to
7 the opportunity and ability to observe accurately the
7 consider in evaluating each witness' testimony.
8 things the witness testified about? Did the witness
8
9 appear to understand the questions clearly and answer them
9 evaluating the defendant's testimony.
10 directly? Did the witness' testimony differ from the
10
11 testimony of other witnesses?
11 officials. The fact that a witness may be employed by the
12
12 government as a law enforcement official does not mean
You should also ask yourself whether there was
You have heard the defendant testify. I just
You should consider the same things in
You have heard the testimony of law enforcement
13 evidence tending to prove that the witness testified
13 that his or her testimony is necessarily deserving of more
14 falsely concerning some important fact or whether there
14 or less consideration or greater or lesser weight than
15 was evidence that at some other time the witness said or
15 that of an ordinary witness.
16 did something or failed to say or do something which was
16
17 different from the testimony the witness gave before you
17 evidence whether to accept the testimony of the law
18 during the trial.
18 enforcement witnesses and to give to that testimony
19
19 whatever weight, if any, that you find that it deserves.
You should keep in mind, of course, that a
It is your decision after reviewing all of the
20 simple mistake by a witness does not necessarily mean that
20
I told you at the outset that this case was
21 the witness was not telling the truth as the witness
21 initiated through an indictment. An indictment is but a
22 remembers it, because people naturally tend to forget some
22 formal method of accusing a defendant of a crime. It
23 things or remember other things inaccurately. So if a
23 includes the government's theory of the case, and I'm
24 witness has made a misstatement, you need to consider
24 going to read the entire indictment again to you in just a
25 whether that misstatement was simply an innocent lapse of
25 moment. The indictment is not evidence of any kind
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against an accused.
income in the sum of approximately $147,999.60, that well
2
The defendant has pled not guilty to the
3 charges pled in the indictment. This plea puts in issue
4 each of the essential elements of the offenses as
5 described in these instructions and imposes upon the
6 government the burden of establishing each of these
6 of America for said calendar year, by failing to make an
7 elements by proof beyond a reasonable doubt.
8
I'm going to read to you the indictment at this
9 time. Of course, you will have the indictment along with
10 the instructions with you in the jury room.
11
12 the defendant Vernice B. Kuglin, had and received taxable
12
14 income in the sum of approximately $137,197.93, that while
21 Service and by failing to pay the Internal Revenue Service
22 the said income tax, in violation of Title 26, United
24
25
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the defendant, Vernice B. Kuglin, had and received taxable
violation of Title 26, United States Code, Section 7201.
2
3 the defendant, Vernice B. Kuglin, had and received income
4 tax or taxable income in the sum of approximately
5 $161,189.07, that well knowing and believing the foregoing
6 facts, the defendant on or about April 15 of 2002, in the
7 Western District of defendant, did willfully attempt to
8 evade and defeat said income tax due and owing by her to
9 the United States of America for said calendar year by
10 failing to make an income tax return on or about April
11 said income tax and by filing a false W-4 -- Form W-4 in
11 15th, 2002, as required by law, to any proper officer of
12 1999, in violation of Title 26, United States Code,
12 the Internal Revenue Service, by failing to pay the
13 Section 7201.
13 Internal Revenue Service said income tax and by filing a
14
14 false Form W-4 in 2001, in violation of Title 26, United
16
17 knowing and believing the foregoing facts, the defendant,
17 defendant violated Section 7201 of Title 26 of the United
18 on or about April 15th, 2001, in the Western District of
18 States Code, which provides in relevant part:
19 Tennessee, did unlawfully attempt to evade and defeat the
19
20 to evade or defeat any tax imposed by the Internal Revenue
21 Code shall be guilty of a crime.
22
23 United States relies upon the honesty of taxpayers. The
24 government needs taxpayers to report timely, completely
25 and honestly all taxes they owe so that it can collect the
Simply put, the indictment alleges that the
Any person who willfully attempts in any manner
The tax -- the system of tax collection in the
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taxes due. Congress, therefore, has made it a criminal
imposed by law. There are many different ways in which a
2 offense for a taxpayer to evade taxes, to file false
2 tax may be evaded or an attempt may be made to evade it.
3 returns or to file no return under certain circumstances.
3 For example, in this case, the government asserts that Ms.
4
4 Kuglin attempted to evade or defeat the income tax due by
In order for the crime of income tax evasion to
5 be proved, the government must establish beyond a
5 filing false Form W-4s for application as to each tax year
6 reasonable doubt each of the following elements:
6 alleged in the counts in the indictment.
7
First, that there was a tax deficiency.
7
8
Second, that the defendant committed an
8 defendant failed to file a tax return for the years 1996,
There has been evidence in this case that the
9 affirmative act constituting tax evasion or attempted tax
9 1997, 1998, 1999, 2000 and 2001. I instruct you that
10 evasion.
10 failure to file a tax return is not sufficient by itself
11
And, third, that the defendant acted willfully.
11 to satisfy this element. Indeed, the government must
12
The first element of the offense which the
12 prove beyond a reasonable doubt an act of evasion.
13 government must prove beyond a reasonable doubt is that
13 Specifically, the government must prove that the defendant
14 there was a tax deficiency, that is that the defendant
14 committed an affirmative act constituting evasion. This
15 owed federal income tax for the years specified in the
15 must be a positive act of commission designed to mislead
16 indictment as to the count that you're considering. The
16 or conceal. A willful act of omission is insufficient to
17 government does not have to prove the exact amount of the
17 satisfy this requirement, therefore, neither the failure
18 taxes the defendant owes, nor must the government prove
18 to file a return nor the failure to pay income tax can be
19 that the defendant evaded all of the tax that she owed.
19 the basis for conviction.
20
20
The second element that the government must
The Supreme Court of the United States has
21 prove beyond a reasonable doubt as to each count is that
21 defined this element as requiring proof of conduct the
22 the defendant committed an affirmative act constituting
22 likely effect of which would be to mislead or conceal. In
23 tax evasion.
23 other words, any act which is likely to mislead the
24
24 government or conceal funds satisfies this element. Thus,
The Internal Revenue Code makes it a crime to
25 attempt, in any manner, to evade or defeat any income tax
25 filing a false form, for example, a W-4 withholding form
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or a false tax return is sufficient, as are false
to pay.
2 statements made to the Internal Revenue Service after the
2
3 return was due or filed. Large cash transactions may also
3 requires a voluntary, intentional violation of a known
4 be evidence of an affirmative act of evasion.
4 legal duty. The requirement of willfulness, therefore,
5
5 means an act undertaken with bad faith or evil intent or
It is not necessary to prove a separate act
The word willfully in the criminal tax statutes
6 constituting evasion for each tax year which was the
6 evil motive and want of justification in view of all of
7 subject of the prosecution; thus, filing a false W-4
7 the financial circumstances of the taxpayer.
8 withholding form satisfies this element as to each year
8
9 for which it was in effect.
9 arises even among taxpayers who earnestly wish to follow
10
10 the law. It is not the purpose of the law to penalize
The third element of the offense which the
In our complex tax system, uncertainty often
11 government must prove beyond a reasonable doubt is that
11 frank differences of opinion or innocent errors made
12 the defendant acted knowingly and willfully.
12 despite the exercise of reasonable care. Degrees of
13
13 negligence give rise in the tax system to civil penalties.
Whether or not the defendant acted knowingly
14 and willfully is a question of fact to be determined by
14 The requirement that an offense be committed willfully is
15 you based upon all of the evidence in this case. An act
15 not met, therefore, if a taxpayer has relied in good faith
16 is done knowingly if it is done purposefully and
16 on a prior decision of the Supreme Court, that's the
17 deliberately and not because of mistake, accident,
17 United States Supreme Court, the Internal Revenue Code or
18 negligence or any other innocent reason.
18 the regulations and instructions published by the Internal
19
19 Revenue Service. Thus, the word willfully under 26 United
The government must also prove beyond a
20 reasonable doubt that the defendant acted willfully. A
20 States Code, Section 7201 includes the concept of bad
21 willful act is defined as a voluntary and intentional
21 faith or evil intent that separates the purposeful tax
22 violation of a known legal duty. Thus, the government
22 violator from the well-meaning, but sometimes confused,
23 must prove beyond a reasonable doubt that the defendant
23 mass of innocent taxpayers.
24 possessed the specific intent to defeat or evade the
24
25 payment of income tax the defendant knew it was her duty
25 faith mistake of the law's requirements. To make such a
Willfulness is negated by the defense of good
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determination, you must inquire into the defendant's mind,
allowed by the law, then she is not guilty of the offenses
2 her mental attitude and her approach to the situation
2 of tax evasion. It does not matter whether the defendant
3 which she believed the law required. If you find that the
3 was right or wrong in her beliefs, nor does it matter if
4 defendant subjectively in her own mind believed that she
4 her beliefs make sense or sound reasonable to you, the
5 was not required by the law to file the returns in
5 jury, or to me, as the judge. The only thing that matters
6 question, it will be your duty to find her not guilty.
6 is whether or not the defendant actually believed she was
7
7 correct in her actions. Also, it is not the defendant's
A defendant does not act willfully if she
8 believes in good faith that her actions comply with the
8 burden to prove that she did not believe her actions
9 law. Therefore, if the defendant actually believed that
9 were -- excuse me, it is not the defendant's burden to
10 what she was doing was in accordance with the tax
10 prove that she did believe her actions were correct. She
11 statutes, she cannot be said to have the criminal intent
11 doesn't have the burden, but rather it is the government's
12 to willfully evade taxes. Thus, if you find that the
12 burden to prove that she did not.
13 defendant honestly believed that she owed no taxes, even
13
14 if that belief was unreasonable or irrational, then you
14 government has proved that the defendant willfully
15 should find her not guilty. However, you may consider
15 committed tax evasion by proving beyond a reasonable doubt
16 whether the defendant's belief was actually reasonable as
16 that she did not actually believe her actions were correct
17 a factor in deciding whether she held that belief in good
17 and by proving all the other elements that I have
18 faith. It should also be pointed out that neither the
18 explained to you in these instructions, or whether the
19 defendant's disagreement with the law nor her own belief
19 defendant believed her actions were proper. If you find
20 that the law is unconstitutional, no matter how earnestly
20 that the government has failed to meet its burden, then
21 that belief is held, constitutes a defense of good faith.
21 you must find the defendant not guilty of these offenses.
22 It is the duty of all citizens to obey the law regardless
22 If there's a reasonable doubt in your mind as to this
23 of whether they agree with it.
23 issue or even if you conclude that the defendant could
24
24 only have believed her actions were proper by abysmal
If the defendant acted in good faith, that is
25 to say she actually believed the actions she took were
It is for you, the jury, to decide whether the
25 ignorance and the rankest kind of stupidity, yet you find
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that she believed that she was correct, and by correct, I
payment of taxes is not optional.
2 mean in conformance with the law, you must find the
2
3 defendant not guilty.
3 to the charges in this case, she asserts that she did not
4
4 file income tax returns or pay income taxes because she
The burden of establishing lack of good faith
As part of the defendant's good faith defense
5 and criminal intent rests upon the prosecution. A
5 had a good faith belief based upon her reading of the
6 defendant is under no burden to prove her good faith. The
6 Paperwork Reduction Act that she was not required to
7 prosecution must prove bad faith or knowledge of falsity
7 comply with the tax laws because the fax forms and
8 beyond a reasonable doubt.
8 instructions did not comply with the provisions of the
9
9 Paperwork Reduction Act. Regarding this matter, I am
In this case, the defendant is not presumed to
10 know the law. I instruct you, however, that the law is
10 instructing you as a matter of law, the Paperwork
11 that wages are income and must be included in gross income
11 Reduction Act does not apply to the statutory requirement
12 when determining income tax liability.
12 that an individual file a tax return, but applies only to
13
13 the forms themselves which contain the appropriate number.
As a part of defendant's good faith defense to
14 the charge in this case, the defendant asserts that she
14
Finally, I want to explain further something
15 did not file income tax returns or pay income taxes
15 about proving a defendant's state of mind. Ordinarily,
16 because she had a good faith belief based upon the use of
16 there is no way that a defendant's state of mind can be
17 the word voluntary and various Internal Revenue Service
17 proved directly because no one can read another person's
18 publications that the filing of tax returns and the
18 mind and tell what that person is thinking.
19 payment of income taxes was voluntary. Regarding this
19
20 matter, I instruct you that the word voluntary is not the
20 indirectly from the surrounding circumstances. This
21 equivalent of optional. To the extent that income taxes
21 includes things like what the defendant said, what the
22 are said to be voluntary, they are only voluntary in that
22 defendant did, how the defendant acted and any other facts
23 one files the return and pays the taxes without the
23 or circumstances in evidence that show what was in the
24 Internal Revenue Service first telling each individual the
24 defendant's mind.
25 amount due and then forcing payment of that amount. The
25
But a defendant's state of mind can be proved
You may also consider the natural and probable
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results of any acts that the defendant knowingly did or
innocence of the accused defendant from the evidence in
2 did not do and whether it is reasonable to conclude that
2 this case. You are not called upon to return a verdict as
3 the defendant intended those results. This, of course, is
3 to the guilt or innocence of any other person or persons.
4 all for you, the jury, to decide.
4 You must determine whether or not the evidence in this
5
5 case convinces you beyond a reasonable doubt of the guilt
If you find that the government has proved
6 beyond a reasonable doubt each of the elements of the
6 of the accused regardless of any belief you may have about
7 offense set out under these instructions, then as to the
7 the guilt or innocence of any other person or persons.
8 count that you are considering, you must return a verdict
8
9 of guilty as to that count. If you find that the
9 only for the purpose of deterring others from committing
10 government has not proved beyond a reasonable doubt each
10 crime.
11 of the elements of the offense as set out in these
11
12 instructions, then as to the count that you are
12 liability of a defendant and a defendant's criminal
13 considering, you must return a verdict of not guilty as to
13 liability. Remember, this is a criminal case.
14 that count.
14
15
I caution you, members of the jury, that you
15 commission of a crime, and the issue of whether the
16 are here to determine from the evidence in this case
16 defendant has or has not settled any civil liability for
17 whether the defendant is guilty or not guilty of Counts 1,
17 the payment of taxes is not to be considered by you in
18 2, 3, 4, 5 and 6 of the indictment. The defendant is on
18 reaching a verdict. Your verdict in this case has no
19 trial only for the specific offenses alleged in the
19 effect on the government's ability to collect any back
20 indictment.
20 taxes and penalties in a civil case.
21
21
Also, the question of punishment should never
You have no right to find the defendant guilty
There is a distinction between the civil
The defendant is charged under the law with the
Any verdict that you reach in the jury room,
22 be considered by the jury in any way in deciding the case.
22 whether guilty or not guilty, must be unanimous. In other
23 If the defendant is convicted, the matter of punishment is
23 words, to return a verdict, all of you must agree. Your
24 for the judge, and actually for the law to determine.
24 deliberations will be secret. You will never have to
25
25 explain your verdict to anyone.
You are here to determine the guilt or
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It is your duty as jurors to discuss the case
follows:
2 with one another in an effort to reach agreement, if you
2
3 can do so. Each of you must decide the case for yourself,
3 for our verdict say:
4 but only after full consideration of the evidence with the
4
5 other members of the jury. While you are discussing the
5 as to Count 1, and there's a blank line. Underneath that
6 case, do not hesitate to re-examine your own opinion and
6 line are these words, guilty or not guilty. And I will
7 change your mind if you become convinced that you were
7 tell you they are in alphabetical order, certainly no
8 wrong. But do not give up your honest beliefs solely
8 preference, just in alphabetical order.
9 because the others think differently or merely to get the
9
10 case over with.
10 Kuglin, as to Count 2, and there's another blank line with
11
11 the choices underneath those -- that line.
Remember, that in a very real way, you are
We the jury, on the charges in the indictment
1. We find the defendant, Vernice B. Kuglin,
Count 2. We find the defendant, Vernice B.
12 judges, judges of the facts.
12
13
13 Kuglin, as to Count 3, and there's a blank line with those
When you go to the jury room, you should first
Count 3. We find the defendant, Vernice B.
14 select one of your members to act as your presiding juror.
14 choices.
15 The presiding juror will preside over your deliberations
15
16 and will speak for you here in court.
16 Count 4, another blank line with those choices.
17
17
A verdict form has been prepared for your
We find the defendant, Vernice B. Kuglin, as to
5. We find the defendant, Vernice B. Kuglin,
18 convenience. The verdict form will be placed in a folder
18 as to Count 5, another blank line with those choices.
19 and handed to you by the court security officer. At any
19
20 time that you're not deliberating, that is when you are at
20 Kuglin, as to Count 6, another blank line with those
21 lunch or during any break, the verdict folder and verdict
21 choices.
22 form should be delivered to the court security officer who
22
23 will deliver it to the courtroom deputy clerk for
23 word date underneath and a line on the bottom right which
24 safekeeping.
24 is supposed to have presiding juror underneath it.
25
25
The verdict form in this case provides as
Count 6, we find the defendant, Vernice B.
There's then a line on the bottom left with the
You will take the verdict form to the jury
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MR. BECRAFT: None, Your Honor. What was at
room, and when you have reached unanimous agreement,
2 you'll have your presiding juror fill in the verdict form
2 the charge conference, that was it.
3 and sign and date it and then return to the courtroom.
3
4
4 alternates go at this time. Of course, once they're
If you should desire to communicate with me at
THE COURT: Okay. I'm going to let the
5 any time, please write down your message or question and
5 excused, they cannot return.
6 pass the note to the court security officer who will then
6
7 bring it to my attention. I will then respond as promptly
7 court.)
8 as possible after consulting with the parties and counsel.
8
9 And I will respond either in writing or by having you
9 Ms. Sanders and, of course, Mr. Stewart, and in a moment,
10 return to the courtroom so that I can address you orally.
10 I will excuse them, and then they will be discharged in
11
11 the case and they cannot return, so I need to be sure that
I caution you, however, that with regard to any
THE COURT: We have two alternates in the case,
12 message that you might send that you should not tell me
12 everybody is okay, that you don't have any crisis that is
13 your numerical division at any time. In other words, you
13 going to cause you not to be available or that you're ill,
14 can never tell me the results of a vote of the jury, only
14 I certainly want to know those things. If anybody is not
15 that you have reached a verdict or not reached a verdict.
15 well or has a problem that is, they think, going to take
16
16 them away from the deliberative process, then this is your
If you a feel to see the exhibits, and they're
17 not being sent back right now, simply advise the court
17 chance to tell me. I don't see any problems in that
18 security officer and, frankly, we will let you have
18 regard. Well, Ms. Sanders, we appreciate your service,
19 whichever exhibits you would like. You can have them all,
19 we're going to let you be discharged. And Mr. Stewart, I
20 if you would like.
20 will actually let both of you go out through the jury room
21
Let me see counsel at side bar.
21 first, and you can actually come around so you don't have
22
22 to walk in front of everybody. Thank you for serving on
23 bench.)
23 the panel, and we appreciate it. Thank you very much.
24
THE COURT: Objections by the United States?
24 You want to come back and watch? Sure. But you can't
25
25 talk to anybody. Okay. All right. That's no problem.
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All right. I made a couple of very minor
break.
2 changes, and I still may not have caught every little
2
3 grammatical matter or misspelling, but I'm going to make
3 same time for any deliberations to occur. If somebody
4 those before I send the instructions back to you. I am
4 does take a restroom break, you should stop your
5 going to hand the folder with the indictment and the
5 deliberations at that time and resume when everybody is
6 verdict form in it, and we will probably have these very
6 reassembled.
7 quickly, it is very minor changes. But we will -- I will
7
8 make those changes before I send them back. Mrs. Saba, I
8 you the folder, and ladies and gentlemen, you are excused
9 think I'm going to go ahead and hand the folder to you.
9 to begin your deliberations. Thank you very much.
10 Mr. Tuggle is there, of course, already.
10
11
11 a.m.)
Ladies and gentlemen, if you want to take your
All twelve of you do have to be together at the
All right. Mr. Tuggle, we're going to hand to
(Jury out to begin deliberations at 11:50
12 lunch break at the regular time, all you have to do is
12
THE COURT: I did assume that we now have all
13 return the folder to the court security officer, and
13 of the exhibits in order. I think we do. I didn't
14 that's our signal that you're taking your lunch break. If
14 actually look at the one that was the modified CFR
15 you do take a lunch break, I suggest that you make it not
15 material, but I take it everybody has looked at that. And
16 terribly long, probably an hour, or if you want to make it
16 I did indicate to the jury that they could retrieve them
17 less, it is up to you, you have control of that at this
17 all. Does anybody have any objections to them having the
18 point in time. We will not be staying particularly late,
18 exhibits if they request them?
19 that's usually not a good idea, but if the jury asks me to
19
MR. MURPHY: Judge, I don't have any objection.
20 stay late, we will, but typically we usually let you go
20
21 home about 5:00 or a little after 5:00 and you come back
21
THE COURT: And defense has no objection also.
22 at your regular time tomorrow. And you can take breaks,
22
23 as I indicated in the afternoon. If you want to take a
23
THE COURT: All right. I think that takes care
24 break, then again hand the folder back to the court
24 of everything. By the way, if we do not hear from the --
25 security officer, and that's an indication that you're on
25 I will ask you to make sure that Mrs. Saba has a pager
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number and so forth, cell phone, whatever is necessary to
to that, I think that makes sense.
2 be in touch with everybody, and if you have not heard from
2
3 anybody at all, and this could happen by, say, quarter of
3 to kind of move in the direction of maybe a weak Allen
4 5:00, you should be back here at that time anyway because
4 charge, is that a suggestion?
5 we will be letting the jury go home, and you probably will
5
6 want to be back when we let the jury go home.
6 there is a -- the modified Allen --
7
7
MR. MURPHY: Judge, I think it's kind of early.
8 downstairs in the snack bar, Your Honor.
8
THE COURT: I think it is too. I was just
9
9 looking at 9.04. Normally, what I do is just tell people
MR. BECRAFT: We will probably camp out
THE COURT: Wherever you want to be is fine.
MR. BECRAFT: Neither do I. If the court wants
THE COURT: Well, we could do that. Let's see,
10 that, you know, it's just not been really very long in a
10 Okay.
11
11 six-count case, frankly, and I'm going to ask them to go
12
(Recess taken at 11:51 a.m.)
12 home now since it is almost 4:00 o'clock, come back
13
(The following proceedings were had at 4:45
13 tomorrow at 8:30 and resume deliberations when they're
14 ready tomorrow and see how things go, and that's what I
14 p.m.)
15
THE COURT: We have a note from the jury, and
15 think we ought to do, and I think that's about all I'm
16 the jury note reads: We, the jury, cannot reach a
16 going to say now.
17 decision on this case at this time. Signed by the
17
18 foreman. I'm trying to -- his name is a little hard to
18
THE COURT: Any objection?
19 read, Joseph Schingle is in seat -- the last seat. I'm
19
20 not sure.
20
THE COURT: Well, let the jury come in and let
21
21 them go home.
Well, it's actually been a fairly short period
22 of time to deliberate, frankly, and normally, simply tell
22
23 them that it has not been very long and that they need to
23
THE COURT: I have a note from the jury -- and
24 deliberate some more.
24 I will let everybody be seated. The procedure is the same
25
25 in every note, and that is that I first talk with the
MR. MURPHY: Judge, I don't have any objection
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parties, and then we decide -- actually, I get to decide
say that you have not really been deliberating that long,
2 what the response is after input from them, but we always
2 and it's not uncommon for juries to have to deliberate
3 read the note out loud first. The note says, August the
3 significantly longer to reach agreement. You can always
4 7th of 2003 at 4:32 p.m. We, the jury, cannot reach a
4 communicate with me. You know how to communicate with me,
5 decision on this case at this time. Signed by Joseph
5 and I'm not trying to be indifferent to your note, but I
6 Schingle, the foreperson in the case. I hope I got the
6 think that's what we ought to do at this time.
7 name right.
7
8
JUROR SCHINGLE: Yes, sir.
8 let everybody rest up and come back fresh tomorrow. Mr.
9
THE COURT: Well, let me tell you what I think
9 Tuggle asked me if the Red Birds were playing, and I don't
So I think a good night's sleep would be good,
10 we ought to do. It is not uncommon for jurors to send me
10 have tickets for every game, so I'm not sure if they're
11 a note like that fairly early in deliberations. You have
11 playing tonight. Do something else, don't think about the
12 actually not been deliberating that long. It may seem
12 case, and when you come back tomorrow and you're all
13 like a long time to you, it probably does, but you have
13 together, we will let you resume your discussions. So
14 not really been deliberating that long. And the thing we
14 have a -- the temperature has been nice today, it has not
15 ought to do is, pretty straightforward, I'm going to let
15 been very hot, you get to get out a little early. Have a
16 you go home at 5:00 o'clock today anyway and ask you to
16 nice afternoon. We will see you at 8:30 tomorrow. Don't
17 come back at 8:30 tomorrow like you have been doing every
17 discuss the case with anybody, don't let anybody talk with
18 day. When you're all together and you have had your cup
18 you about it, the same instructions that you have had in
19 of coffee and snack and you're ready to begin your
19 the past. We will see you tomorrow at 8:30. Thanks very
20 deliberations, simply knock on the door, and Mr. Tuggle
20 much.
21 will probably -- you will be here tomorrow?
21
22
COURT SECURITY OFFICER: Yes.
22
THE COURT: Y'all can be seated. I do need to
23
THE COURT: Mr. Tuggle will be here tomorrow,
23 ask, any objection to the instruction by the United
24 and he will hand you the verdict folder with the
24 States?
25 enclosures and let you resume your deliberations. Just
25
767
THE COURT: Any objection from the defense?
2
3
THE COURT: All right. Gentlemen and ladies,
4 you really don't have to be here at 8:30 at all tomorrow.
5 And I know you have things to catch up on. You're welcome
6 to be here. I'm glad to have you here if you would like
7 to be. We have something at 9:00. It's really a light
8 day. I do have a few things in and out of here during the
9 day, but make sure Mrs. Saba has a number where we can
10 reach you. We will see you tomorrow.
11
12
13
14
15
16
17
18
WESTERN DIVISION
)
Plaintiff,
)
)
VS.
)
)
)
VERNICE KUGLIN,
)
)
Defendant.
)
NO. 03-20111-Ml
AUGUST 8, 2003
VOLUME V
19
20
21
22
23
24
25
BRENDA PARKER
OFFICIAL REPORTER
770
769
FRIDAY MORNING & AFTERNOON
APPEARANCES
209 LINCOLN STREET
2
3
AUGUST 8, 2003
4 Friday, August 8, 2003, at 2:00 o'clock p.m., when and
5 where proceedings were had as follows:
6
7
____________
8
9
(The following proceedings were had at 2:00
10 p.m.)
11
THE COURT: All right. The procedure is that
12 we will have the jury come in, and the foreman in this
13 case is Mr. Schingle. We will ask him to bring the folder
14 to the stand, the podium closest to me, he will hand it to
15 Ms. Flagg, and she will hand it to me. I will look at it
16 to make sure it is signed and dated and filled in. If it
17 is signed and dated, then I will hand it back to Mr.
18 Schingle and have him read the verdict. The procedure is
19 that, of course, after that, after he reads the whole
20 verdict, then I will start with Ms. Vasser in seat one and
21 ask each person is it their verdict, and then if everybody
22 says it is, then it becomes the official verdict in the
23 case. I just remind everybody that whatever it is, and I
24 don't have any idea what it will be, I ask everybody not
25 to say anything, there isn't anything to say really at
772
771
this point in time, and we will take up any later matters,
Count 1?
2 if there are any to take up, as soon as I discharge the
2
JUROR SCHINGLE: Not guilty, Your Honor.
3 jury. Okay. Bring them in.
3
THE COURT: What is the verdict on Count 2?
4
4
5
THE COURT: I will have the foreman come around
5
THE COURT: What is the verdict on Count 3?
6 to the podium. Everybody have a seat. I'm going to
6
JUROR SCHINGLE: Not guilty.
7 ask -- to this podium.
7
THE COURT: And what the verdict on Count 4?
8
JUROR SCHINGLE: Oh, I'm sorry.
8
9
THE COURT: That's no problem. What you have
9
THE COURT: The verdict on Count 5?
10 to do is, we're going to, in just a second, let you hand
10
11 the folder with the material to me first. I have to look
11
THE COURT: And the verdict on Count 6?
12 at it, make sure it is signed, dated and filled out.
12
13 Before we read anything, if something wasn't signed and
13
THE COURT: Let me ask you as foreman and also
14 dated and filled out, I have to hand it back, so I have to
14 in your individual juror capacity, do you agree with the
15 always check.
15 verdict?
16
16
JUROR SCHINGLE: Yes, I do.
17 and, Mr. Schingle, I'm going to ask you to start with
17
THE COURT: Let me ask Ms. Vasser, is this also
18 Count 1 and just read them, 1, 2, 3, 4, 5 and 6, and give
18 your verdict?
19 us your verdict on each one as you read the verdict form.
19
JUROR VASSER: Yes.
20 And then I'm start with Ms. Vasser in seat one, I will ask
20
THE COURT: And Mr. Vetter, is it also your
21 each of you in order is this your verdict, because, of
21 verdict?
22 course, the verdict does have to be unanimous.
22
JUROR VETTER: Yes.
23
JUROR SCHINGLE: Do I read it or just tell you?
23
THE COURT: Ms. Snodgrass, is it your verdict?
24
THE COURT: I can do it like they do on
24
JUROR SNODGRASS: Yes, it is.
25
THE COURT: Mr. Stovall, is it your verdict?
Everything is in order. I will hand it back
25 television too. Would you tell me what the verdict is on
774
773
JUROR STOVALL: Yes.
2
THE COURT: And Mr. Smith -- and there are
anybody you would like to about the case. There's one
2 rule, and that is that the lawyers and the parties can't
3 several Mr. Smiths, so I better say Mr. Alphonso Smith?
3 really quiz you about the verdict. You can speak to them,
4
JUROR ALPHONSO SMITH: Yes, sir.
4 you can tell them about the verdict if you want to, and
5
THE COURT: Mr. Keith Smith?
5 you may be interested in talking to them, that's fine,
6
JUROR KEITH SMITH: Yes, sir.
6 there's nothing wrong with that, but they're not going to
7
THE COURT: Mr. Shaneyfelt?
7 ask you a lot of questions because the jury deliberations
8
JUROR SHANEYFELT: Yes.
8 are not something that they are allowed to inquire into,
9
THE COURT: Ms. Stidham?
9 so, you know, they might ask you, you know, what was it
10
JUROR STIDHAM: Yes.
10 like to serve on a jury, but that's about it. So I need
11
THE COURT: Mr. Inderbitzen?
11 to let you know that that is the reason they won't be
12
JUROR INDERBITZEN: Yes, it is.
12 asking you. If you do speak to them, they won't be asking
13
THE COURT: And Ms. Stout?
13 you any questions at all.
14
JUROR STOUT: Yes, Your Honor.
14
15
THE COURT: And Mr. Simpson?
15 other people to serve on juries. We have a lot of folks
16
JUROR SIMPSON: Yes.
16 who try not to, and we just want you to please tell people
17
THE COURT: All right. I'm going to ask you to
17 not to. And the third thing is that I want to thank you
The next thing is that we want you to encourage
18 hand the -- well, you have handed the folder, I'm going to
18 for serving on the panel. It turned out to be about the
19 let you go back to your seat then, and hand the folder to
19 length we projected, it doesn't always work out that way,
20 Ms. Flagg, it does become the official verdict in the
20 so I feel pretty good about this case in terms of the
21 case, and it is recorded, so it will conclude all matters
21 length, but we do appreciate each of you being able to
22 in the case.
22 serve on the jury.
23
23
I need to tell you a couple of things. First
So what I'm going to do in just a second is I'm
24 of all, in just a second, I'm going to discharge you as
24 going to discharge you, let you go to the jury room. I'm
25 jurors in the case. And at that time, you can talk with
25 going to let the parties here be excused, and then if you
776
775
want to speak to them after you have gone to the jury
happened?
2 room, then Mr. Tuggle will open the door after I've left,
2
UNIDENTIFIED PERSON: Yes.
3 and then you can either come back in here or you can leave
3
THE COURT: I have got my two alternates here,
4 and go out the other door, whichever way you want to go.
4 I thought I would just say that while you were here.
5 Again, you're not obligated to speak to anybody at all.
5 That's all, you just wanted to get a picture with
6 Don't feel like you have to. Again, thank you very much
6 everybody, is that right?
7 for serving on the jury, and at this time, ladies and
7
UNIDENTIFIED PERSON: Yes, sir.
8 gentlemen, you are discharged in the case and you are
8
That's what I understood that happened, I
9 excused. Thank you very much.
9 didn't attribute any particular significance to that.
10
(Jury out at 2:05 a.m)
10
Who took your picture?
11
THE COURT: There is one thing I need to tell
11
UNIDENTIFIED PERSON: It was just --
12 the parties about and then we will be concluded. And I
12
UNIDENTIFIED PERSON: I did, Your Honor.
13 didn't tell the parties this morning about this, frankly,
13
THE COURT: That's okay. But there wasn't any
14 because the jury had begun deliberations -- you can have a
14 big deal about it. That's a little unusual. It's nothing
15 seat just for a second. I frankly don't attribute
15 wrong with it in the least, but if somebody comes and
16 anything to this, but if somebody tells me something, I
16 tells me about something, I just have to tell these guys,
17 need to convey it to you. And that is that last evening
17 that's the way it works. So anything else from the United
18 about 5:30 or so, I think it was Ms. Pigues and perhaps
18 States?
19 Mr. Tuggle did come in and say that the jurors, as they
19
20 were leaving in the basement area, I think somebody was
20 on notice, she has got to pay taxes, I think the court
21 taking their photographs, and I don't really attribute
21 ought to instruct her that that is the law. She has got
22 much to that. I think they did ask perhaps someone who
22 to file returns and --
23 was a member of the audience to take pictures, maybe the
23
24 alternates may have, I don't know, is that what happened?
24 cleaned up totally.
25 I have got my two alternates here. Is that all that
25
MR. MURPHY: Just one thing, to put Ms. Kuglin
MR. BECRAFT: Your Honor, that is going to be
THE COURT: Okay. Well, Mr. Murphy is not
778
777
incorrect that it is the law, and I think what he's also
CERTIFICATE
2 saying is there will still be civil penalties.
3
MR. BECRAFT: I expect probably 90-day letters
I, Brenda Parker, do hereby certify that the
4 to be coming pretty quick.
5
THE COURT: Okay.
foregoing pages 1-778 are, to the best of my knowledge,
6
MR. BECRAFT: And there's going to be civil
skill and ability, a true and accurate transcript from my
7 proceedings, and she is going to being take
stenotype notes of the trial on August 4-8, 2003, in the
8 responsibility -- she is going to be doing things to
matter of:
9 respond to all of that like file returns, Your Honor.
United States of America
10
vs.
THE COURT: Well, I'm just the judge here, I'm
11 not the IRS, so I think I'll leave that up to the other
Vernice B. Kuglin
12 folks. Anything -- I asked the government. Anything from
Dated this 26th day of September, 2003.
13 the defense?
14
MR. BECRAFT: Your Honor, I think on behalf of
15 all the lawyers, I would like to say that it has been a
16 pleasure to be in your court.
_______________________________
17
BRENDA PARKER
THE COURT: Well, thank you. We're going to
18 let everybody be excused.
Official Court Reporter
19
MR. MURPHY: Thank you, Judge.
United States District Court
20
Western District of Tennessee
21
MR. BERNHOFT: Thank you.
22
THE CLERK: All rise, please. This Honorable
23 United States District Court now stands adjourned.
24
25

direct - vernice kuglin

Transcription

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